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As filed with the Securities and Exchange Commission on 22 May 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
(Exact Name of Registrant)
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(Name and Address of principal executive office of depositor)
Matthew P. McCauley, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, MO 63101
(Name and Address of Agent for Service of Process)
Approximate date of proposed public offering: as soon as practical after the
effective date of this Registration Statement.
Securities Being Offered: Joint and survivor variable universal life contracts
An indefinite number of the securities being offered is being registered
under the Securities Act of 1933 pursuant to Rule 24f-2 issued under the
Investment Company Act of 1940.
The Registrant intends to amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until such date as the
Commission, acting pursuant to said Section 8(a), may determine that the
Registration Statement shall become effective on.
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<TABLE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
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Item No. of
Form N-8B-2 Caption in Prospectus
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1. Cover Page
2. Cover Page
3. Not Applicable
4. Distribution of the Policies
5. The Company and the Separate Account
6. The Separate Account
7. Not Required
8. Not Required
9. Legal Proceedings
10. Summary; Policy Benefits; Policy Rights;
Charges and Deductions; General Matters;
Voting Rights
11. Summary; General American Capital
Company
American Century Variable
Portfolios/J.P. Morgan Series Trust
II/Variable Insurance Products
Fund/Variable Insurance Products Fund
II/VanEck Worldwide Insurance Trust
12. Summary; The Company and the Separate
Account
13. Summary; Charges and Deductions
14. Summary; Payment and Allocation of
Premiums
15. Payment and Allocation of Premiums
16. Payment and Allocation of Premiums
17. Summary; Policy Rights; Payment and
Allocation of Premiums; Charges and
Deductions
18. Payment and Allocation of Premiums
19. General Matters; Voting Rights
20. Not Applicable
21. Policy Rights; General Matters
22. Not Applicable
23. Safekeeping of the Separate Account's
Assets
24. General Matters
25. The Company and the Separate Account
26. Not Applicable
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<CAPTION>
Item No. of
Form N-8B-2 Caption in Prospectus
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27. The Company and the Separate Account
28. Management of the Company
29. The Company and the Separate Account
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Company and the Separate Account
36. Not Required
37. Not Applicable
38. Summary; Distribution of the Policies
39. Summary; Distribution of the Policies
40. Distribution of the Policies
41.(a) The Company and the Separate Account;
Distribution of the Policies
(b) Not required
(c) Not required
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premiums
45. Not Applicable
46. Policy Rights
47. Payment and Allocation of Premiums
48. Not Applicable
49. Not Applicable
50. The Separate Account
51. Cover Page; Summary; Policy Benefits;
Policy Rights; Payment and Allocation
of Premiums
52. The Company and the Separate Account
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
</TABLE>
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FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR
VARIABLE LIFE INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 MARKET STREET ST. LOUIS, MO 63101 (314) 231-1700
This Prospectus describes a flexible premium joint and last survivor variable
life insurance Policy ("the Policy") offered by General American Life Insurance
Company ("General American" or "the Company"). The Policy is designed to
provide lifetime insurance protection and at the same time provide maximum
flexibility to vary premium payments and change the level of death benefits
payable under the Policy. This flexibility allows an Owner to provide for
changing insurance needs under a single insurance policy. An Owner also has
the opportunity to allocate Net Premiums among several investment portfolios
with different investment objectives.
The Policy provides for: (I) a Cash Surrender Value that can be obtained by
surrendering the Policy; (2) Policy Loans; and (3) a death benefit payable at
the death of the Last Insured. As long as a Policy remains in force before the
younger Insured's Attained Age 100, the death benefit will not be less than the
current Face Amount of the Policy. A Policy will remain in force so long as
its Cash Surrender Value is sufficient to pay certain monthly charges imposed
in connection with the Policy.
After the end of the "Right to Examine Policy" period, Net Premiums may be
allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or in certain contracts to General
American's General Account. If Net Premiums are allocated to the Separate
Account, the amount of the Cash Value will vary to reflect the investment
performance of the investment Divisions selected by the Owner, the Policy may
lapse, and, depending on the death benefit option elected, the amount of the
death benefit above the minimum may also vary with that investment
performance. The Owner bears the entire investment risk for all amounts
allocated to the Separate Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from the
following open-end, diversified management investment companies: General
American Capital Company, Russell Insurance Funds, American Century Variable
Portfolios, J.P. Morgan Series Trust II, Variable Insurance Products Fund,
Variable Insurance Products Fund II, and Van Eck Worldwide Insurance Trust.
Funds offered from General American Capital Company include the S & P 500
Index Fund, the Money Market Fund, the Bond Index Fund, the Managed Equity
Fund, the Asset Allocation Fund, the International Index Fund, the Mid-Cap
Equity Fund, and the Small-Cap Equity Fund. Funds offered from Russell
Insurance Funds include the Multi-Style Equity Fund, the Aggressive Equity
Fund, the Non-U.S. Fund, and the Core Bond Fund. Funds offered from
American Century Variable Portfolios include the Income & Growth Fund, the
International Fund, and the Value Fund. Funds offered from J.P. Morgan
Series Trust II include the Bond Portfolio and the Small Company Portfolio.
Funds offered from Variable Insurance Products Fund include the Equity-Income
Portfolio, the Growth Portfolio, the High Income Portfolio, and the Overseas
Portfolio. The Fund offered from Variable Insurance Products Fund II is the
Asset Manager Portfolio. The Funds offered from Van Eck Worldwide Insurance
Trust are the Worldwide Hard Assets Fund and the Worldwide Emerging Markets
Fund. A full description of the Funds, including the investment policies,
restrictions, risks, and charges is contained in the Prospectus of each Fund.
It may not be advantageous to purchase a Policy as a replacement for another
type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium joint and
last survivor variable life insurance policy.
This Prospectus must be accompanied by current Prospectuses for each Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Please read this Prospectus carefully and retain it for future reference.
The date of this Prospectus is July 1, 1998. The Policies are not available
in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
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<TABLE>
TABLE OF CONTENTS
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Page
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Definitions 1
Summary 2
The Company and the Separate Account 6
The Company
The Separate Account
General American Capital Company
Russell Insurance Funds
American Century Variable Portfolios
J.P. Morgan Series Trust II
Variable Insurance Products Fund
Variable Insurance Products Fund II
Van Eck Worldwide Insurance Trust
Addition, Deletion, or Substitution of Investments 10
Policy Benefits 11
Death Benefit
Cash Value
Policy Rights 14
Loans
Surrender, Partial Withdrawals and Pro Rate Surrender
Transfers
Portfolio Rebalancing
Dollar Cost Averaging
Right to Examine Policy
Death Benefit at Attained Age 100
Payment and Allocation of Premiums 19
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
Charges and Deductions 21
Premium Expense Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
Dividends 24
The General Account 24
General Matters 26
Distribution of the Policies 29
Federal Tax Matters 29
Unisex Requirements Under Montana Law 32
Safekeeping of the Separate Account's Assets 33
Voting Rights 33
State Regulation of the Company 33
Management of the Company 34
Legal Matters 36
Legal Proceedings 37
Experts 37
Additional Information 37
Financial Statements 37
Appendix A - Illustration of Death Benefits and Cash Values 38
</TABLE>
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DEFINITIONS
ATTAINED AGE - The Issue Age of an Insured plus the number of completed
Policy Years.
BENEFICIARY - The person(s) named in the application or by later designation
to receive Policy proceeds in the event of the Last Insured's death. A
Beneficiary may be changed as set forth in the Policy and this Prospectus.
CASH VALUE - The total amount that a Policy provides for investment at any
time. It is equal to the total of the amounts credited to the Owner in the
Separate Account and the General Account, including the Loan Account.
CASH SURRENDER VALUE - The Cash Value of a Policy on the date of surrender,
less any Indebtedness, and less any surrender charges.
DIVISION - A subaccount of the Separate Account. Each Division invests
exclusively in the shares of a corresponding Fund of either General American
Capital Company, Russell Insurance Funds, American Century Variable
Portfolios, J.P. Morgan Series Trust II, Variable Insurance Products Fund,
Variable Insurance Products Fund II, or Van Eck Worldwide Insurance Trust.
EFFECTIVE DATE - The date as of which insurance coverage begins under a
policy.
FACE AMOUNT - The minimum death benefit under the Policy so long as the
Policy remains in force.
FUND - A separate investment Portfolio of either General American Capital
Company, Russell Insurance Funds, American Century Variable Portfolios, J.P.
Morgan Series Trust II, Variable Insurance Products Fund, Variable Insurance
Products Fund II, or Van Eck Worldwide Insurance Trust. Although sometimes
referred to elsewhere as "Portfolios," they are referred to herein as
"Funds," except where "Portfolio" is part of their name.
GENERAL ACCOUNT -The assets of the Company other than those allocated to the
Separate Account or any other separate account. The Loan Account is part of
the General Account.
HOME OFFICE - The service office of General American Life Insurance Company,
the mailing address of which is P.O. Box 14490, St. Louis, Missouri 63178.
INDEBTEDNESS - The sum of all unpaid Policy Loans and accrued interest on
loans.
INSURED - The persons whose lives are insured under the Policy.
INVESTMENT START DATE - The date the initial premium is applied to the
General Account and/or the Divisions of the Separate Account. This date is
the later of the Issue Date or the date the initial premium is received at
General American's Home Office.
ISSUE AGE - The age of each Insured at his or her nearest birthday as
of the date the Policy is issued.
ISSUE DATE - The date from which Policy Anniversaries, Policy Years, and
Policy Months are measured.
LAST INSURED - The Insured whose death succeeds the death of all other
Insureds under the Policy.
LOAN ACCOUNT - The account of the Company to which amounts securing Policy
Loans are allocated. The Loan Account is part of General American's General
Account.
LOAN SUBACCOUNT - A Loan Subaccount exists for the General Account and for
each Division of the Separate Account. Any Cash Value transferred to the
Loan Account will be allocated to the appropriate Loan Subaccount to reflect
the origin of the Cash Value. At any point in time, the Loan Account will
equal the sum of all the Loan Subaccounts.
MONTHLY ANNIVERSARY - The same date in each succeeding month as the Issue
Date except that whenever the Monthly Anniversary falls on a date other than
a Valuation Date, the Monthly Anniversary will be deemed the next Valuation
Date. If any Monthly Anniversary would be the 29th, 30th, or 31st day of a
month that does not have that number of days, then the Monthly Anniversary
will be the last day of that month.
NET PREMIUM - The premium less the premium expense charges (consisting of the
sales charge and the premium tax charge).
OWNER - The Owner of a Policy, as designated in the application or as
subsequently changed.
POLICY - The flexible premium joint and last survivor variable life insurance
Policy offered by the Company and described in this Prospectus.
POLICY ANNIVERSARY - The same date each year as the Issue Date.
POLICY MONTH - A month beginning on the Monthly Anniversary.
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POLICY YEAR - A period beginning on a Policy Anniversary and ending on the
day immediately preceding the next Policy Anniversary.
PORTFOLIO - see Fund.
SEC - The United States Securities and Exchange Commission.
SEPARATE ACCOUNT - General American Separate Account Eleven, a separate
investment account established by the Company to receive and invest the Net
Premiums paid under the Policy, and certain other variable life policies, and
allocated by the Owner to provide variable benefits.
TARGET PREMIUM - A premium calculated when a Policy is issued, used to
calculate various charges and agent compensation under the Policy.
VALUATION DATE - Each day that the New York Stock Exchange is open for
trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
VALUATION PERIOD - The period between two successive Valuation Dates,
commencing at 4:00 p.m. (Eastern Standard Time) on a Valuation Date and
ending 4:00 p.m. on the next succeeding Valuation Date.
SUMMARY
THE FOLLOWING SUMMARY OF PROSPECTUS INFORMATION SHOULD BE READ IN CONJUNCTION
WITH THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, THE DESCRIPTION OF THE POLICIES CONTAINED IN THIS
PROSPECTUS ASSUMES THAT A POLICY IS IN FORCE AND THAT THERE IS NO OUTSTANDING
INDEBTEDNESS.
THE POLICY. Under the flexible premium joint and last survivor variable life
insurance Policy described in this Prospectus, the Owner may, subject to
certain limitations, make premium payments in any amount and at any frequency.
The Policy is a life insurance contract with death benefits, Cash Value,
surrender rights, Policy Loan privileges, and other features traditionally
associated with life insurance. It is a "flexible premium" Policy because,
unlike traditional insurance policies, there is no fixed schedule for premium
payments. Although the Owner may establish a schedule of premium payments
("planned premium payments"), failure to make the planned premium payments will
not necessarily cause a Policy to lapse nor will making the planned premium
payments guarantee that a Policy will remain in force. Thus, an Owner may, but
is not required to, pay additional premiums. This flexibility permits an Owner
to provide for changing insurance needs within a single insurance policy.
The Policy is a "joint and last survivor" Policy because, unlike a single
life policy, it insures the lives of two Insureds, and provides a death
benefit that is payable upon the death of the second of the two Insureds. No
death benefit is payable upon the death of the first Insured to die.
The Policy is a "variable" Policy because, unlike the fixed benefits under an
ordinary life insurance contract, to the extent that Net Premiums are
allocated to the Separate Account, the Cash Value and, under certain
circumstances, the death benefit under a Policy may increase or decrease
depending upon the investment performance of the Divisions of the Separate
Account to which the Owner has allocated Net Premium payments. However, so
long as a Policy's Cash Surrender Value continues to be sufficient to pay the
monthly deductions, an Owner is guaranteed a minimum death benefit equal to
the Face Amount of his or her Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash Surrender
Value is insufficient to pay the next monthly deduction and a grace period of
62 days expires without an adequate payment being made by the Owner. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.)
THE SEPARATE ACCOUNT. After the end of the "Right to Examine Policy" period,
the Owner may allocate the Net Premiums to the Separate Account and, if it is
available, to the General Account. Amounts allocated to the Separate Account
are further allocated to one or more Divisions. Assets of each Division are
invested at net asset value in shares of a corresponding Fund. (See The
Company and the Separate Account,) An Owner may change future allocations of
Net Premiums at any time.
The option offered in connection with the Policies to allocate Net Premiums
or to transfer Cash Value to the General Account may not be made available,
at the Company's discretion, under all Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which future premiums may be allocated to the General
Account in regard to any or all outstanding Policies. Such adjustments may
not be uniform as to all Policies.
Until the end of the "Right to Examine Policy" period (See Policy Rights -
Right to Examine Policy), all Net Premiums automatically will be allocated to
the Division that invests in the Money Market Fund. (See Payment and
Allocation of Premiums - Allocation of Net Premiums and Cash Value.)
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To the extent Net Premiums are allocated to the Divisions of the Separate
Account, the Cash Value will, and the death benefit may, vary with the
investment performance of the chosen Division. To the extent Net Premiums
are allocated to the General Account, the Cash Value will accrue interest at
a guaranteed minimum rate. (See The General Account.) Thus, depending upon
the allocation of Net Premiums, investment risk over the life of a Policy may
be borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values among the
Divisions of the Separate Account or, it available, between the Separate
Account and the General Account. Currently, no charge is assessed for
transfers. The Company reserves the right to revoke or modify the transfer
privilege. (See Policy Rights - Transfers.)
CHARGES AND DEDUCTIONS. A premium expense charge will be deducted from each
premium payment prior to allocation. The premium expense charge consists of
a sales charge and a charge to cover premium taxes and federal taxes. The
sales charge will never exceed the following levels:
Policy Year 1 15% of premium up to Target
5% of premium above Target
Policy Years 2-10 5% of all premium paid
Policy Years 11+ 2% of all premium paid
For policies issued in the state of Oregon, the amounts shown above are
increased by 2%.
In addition to the sales charges shown above, there is a premium tax charge
in all policy years. This charge varies by state or other jurisdiction and
provides a pass-through of the actual premium tax (if any) incurred by the
policy as a result of taxes imposed by the state or other jurisdiction. We
reserve the right to change the premium tax charge as a result of rate
changes of the governing jurisdiction. There is a federal tax charge
designed to pass through the equivalent of the federal tax applicable to the
policy. The federal tax charge is currently 1.3% of premium paid, and is
guaranteed not to increase except to the extent of any increases in the
federal tax. (See Charges and Deductions - Premium Expense Charges.)
A Contingent Deferred Sales Charge (CDSC or Surrender Charge) to compensate
for sales expenses will also be assessed against the Cash Value under a
Policy upon a surrender, a lapse, a partial withdrawal, or pro rata
surrender. The CDSC will never exceed 45% of the annual Target Premium
attributable to the base policy. (See Policy Rights - Surrender, Partial
Withdrawals, and Pro Rata Surrender; Policy Benefits - Death Benefit; and
Charges and Deductions - Contingent Deferred Sales Charge.) Reductions in
the Contingent Deferred Sales Charge are available in some situations. (See
Adjustment of Charges.)
On each Monthly Anniversary, the Cash Value will be reduced by a monthly
deduction. The monthly deduction includes an administrative charge of $25
per month for each Policy Month during the first Policy Year, and $6 per
month for each Policy Month beginning in the second Policy Year. (See
Charges and Deductions - Monthly Deduction.) A monthly charge is also made
for the cost of insurance, and the cost of any additional benefits provided
by rider. (See Charges and Deductions - Monthly Deduction.)
A daily charge based on a percentage of the net assets of each Division of
the Separate Account will be imposed for the Company's assumption of certain
mortality and expense risks incurred in connection with the Policies. The
charge will not exceed an amount equal to the following effective annual
charges:
Policy Years 1-10 .55% of net Separate
Account assets
Policy Years 11-20 .45% of net Separate
Account assets
Policy Years 21+ .35% of net Separate
Account Assets
(See CHARGES AND DEDUCTIONS - SEPARATE ACCOUNT CHARGES.)
The Company may make a charge for any taxes or economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policy. (See Federal Tax
Matters.)
The operating expenses of the Separate Account are paid by General American.
Investment Advisory fees and other operating expenses of the Funds are paid
by the Funds and are reflected in the value of the assets of the
corresponding Division of the Separate Account. For a description of these
charges, see Charges and Deductions--Separate Account Charges,.
There are no transaction charges to cover the administrative costs of
processing the first twelve partial withdrawals or transfers of Cash Value
between Divisions of the Separate Account or the General Account in any Policy
Year. (See Payment and Allocation of Premiums - Allocation of Net Premiums and
Cash Value; Policy Rights - Surrender, Partial Withdrawals, and Pro Rata
Surrender; and The General Account.)
PREMIUMS. An Owner has considerable flexibility concerning the amount and
frequency of premium payments. A Policy will not become effective until the
Owner has paid an initial premium equal to one-
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twelfth (1/12) of the "Minimum Premium" for the Policy. This amount will
be different for each Policy. Thereafter, an Owner may, subject to certain
restrictions, make premium payments in any amount and at any frequency.
The Owner may also determine a planned premium payment schedule. The
schedule will provide for a premium payment of a level amount at a fixed
interval over a specified period of time. An Owner need not, however,
adhere to the planned premium payment schedule. For policies issued as a
result of a term conversion from certain General American term policies,
the Company requires the Owner to pay an initial premium, which combined
with conversion credits given, if any, will equal one full "Minimum
Premium" for the Policy. (See Payment and Allocation of Premiums.)
If, during the first five Policy Years, the sum of all premiums paid on the
Policy, reduced by any partial withdrawals and any outstanding loan balance,
is greater than or equal to the sum of the No Lapse Monthly Premiums for the
elapsed months since the Issue Date, the Policy will not lapse as a result of
a Cash Value less any loans, loans interest due, and any surrender charge
being insufficient to pay the monthly deduction. A Policy will lapse only
when the Cash Surrender Value is insufficient to pay the next monthly
deduction (See Charges and Deductions - Monthly Deduction.) and a grace
period expires without a sufficient payment by the Owner. (See Payment and
Allocation of Premiums - Policy Lapse and Reinstatement.)
DEATH BENEFIT. A death benefit is payable to the named Beneficiary when the
Last Insured under a Policy dies. Three death benefit options are available.
Under Death Benefit Option A, the death benefit is the Face Amount of the
Policy or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option B, the death benefit is the Face Amount of the Policy plus the
Cash Value or, if greater, the applicable percentage of Cash Value. Under
Death Benefit Option C, the death benefit is the Face Amount of the Policy
or, if greater, the Cash Value multiplied by the Attained Age factor for the
younger Insured. So long as the Policy remains in force prior to the younger
Insured's Attained Age 100, the minimum death benefit under any death benefit
option will be at least the current Face Amount. The death benefit will be
increased by any unpaid dividends (if any) determined prior to the Last
Insured's death, and by the amount of the cost of insurance for the portion
of the month from the date of death of the Last Insured to the end of the
month, and reduced by any outstanding Indebtedness. The death benefit will
be paid according to the settlement options available at the time of death.
(See Policy Benefits - Death Benefit.)
The minimum Face Amount at issue is $100,000 under the Company's current
rules. Subject to certain restrictions, the Owner may change the Face Amount
and the death benefit option. In certain cases evidence of insurability may
be required. (See Change in Death Benefit Option, and Change In Face
Amount.)
Additional insurance benefits are offered under the Policy. (See General
Matters - Additional Insurance Benefits.) The cost of these additional
insurance benefits will be deducted from the Cash Value as part of the monthly
deduction. (See Charges and Deductions - Monthly Deduction.)
CASH VALUE. The Policies provide for a Cash Value equal to the total of the
amounts credited to the Owner in the Separate Account, the Loan Account
(securing Policy Loans) and in certain contracts, the General Account. A
Policy's Cash Value will reflect the amount and frequency of Net Premium
payments, the investment performance of any selected Divisions of the
Separate Account, any Policy Loans, any partial withdrawals, and the charges
imposed in connection with the Policy. (See Policy Benefits - Cash Value.)
There is no minimum guaranteed Cash Value.
POLICY LOANS. An Owner may borrow against the Cash Value of a Policy. The
maximum amount that may be borrowed under a Policy ("the Loan Value") is the
Cash Value of the Policy on the date the loan request is received, plus
interest expected to be earned on the loan balance to the next Policy
Anniversary at the General Account's guaranteed interest rate, less loan
interest to the next Policy Anniversary, less any outstanding Indebtedness,
less any surrender charges, less monthly deductions to the next loan interest
due date. Loan interest is payable on each Policy Anniversary and all
outstanding Indebtedness will be deducted from proceeds payable at the Last
Insured's death, upon the exercise of a settlement option, or upon surrender.
A Policy loan will be allocated among the General Account (if available) and
the various Divisions of the Separate Account. When a loan is allocated to
the Divisions of the Separate Account, a portion of the Policy's Cash Value
in the Divisions of the Separate Account sufficient to secure the loan will
be transferred to the Loan Account as security for the loan. Therefore, a
loan may have impact on the Policy's Cash Value even if it is repaid. A
Policy Loan may be repaid in whole or in part at any time while the Policy is
in force. (See Policy Rights - Loans.) Loans taken from, or secured by, a
Policy may have Federal income tax consequences. (See Federal Tax Matters.)
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SURRENDER, PARTIAL WITHDRAWALS, AND PRO RATA SURRENDER. At any time that a
Policy is in force, an Owner may elect to surrender the Policy and receive
its Cash Surrender Value plus the value of dividends (if any) determined
prior to the surrender. After the first year, an Owner may also request a
partial withdrawal of the Cash Surrender Value of the Policy. When the death
benefit is not based on an applicable percentage of the Cash Value, a partial
withdrawal reduces the death benefit payable under the Policy by an amount
equal to the reduction in the Policy's Cash Value unless the withdrawal is
made under the terms of the Anniversary Partial Withdrawal Rider. An Owner
may also request a pro rata surrender of the Policy. (See Policy Rights -
Surrender, Partial Withdrawals, and Pro Rata Surrender.) A surrender, partial
withdrawal, or pro rata surrender may have Federal income tax consequences.
(See Federal Tax Matters.)
RIGHT TO EXAMINE POLICY. The Owner has a limited right to return a Policy
for cancellation within 20 days after receiving it (30 days if the Owner is a
resident of California and is age 60 or older), or within 45 days after the
application is signed, whichever is later (or such longer period, if any, as
required by law). If a Policy is canceled within this time period, a refund
will be paid which will equal all premiums paid under the Policy except in
Kansas. (See Policy Rights - Right to Examine Policy.)
ILLUSTRATIONS OF DEATH BENEFITS AND CASH SURRENDER VALUES. Illustrations in
Appendix A show how death benefits and Cash Surrender Values may vary based on
certain rate of return assumptions and how these benefits compare with amounts
which would accumulate if premiums were invested to earn interest at 5%
compounded annually. If a Policy is surrendered in the early Policy Years the
Cash Surrender Value payable will be low as compared to premiums accumulated at
interest, and consequently the insurance protection provided prior to surrender
will be costly. You may make a written request for a projection of
illustrated future Cash Values and death benefits for a nominal fee not to
exceed $25.00.
TAX CONSEQUENCES OF THE POLICY. If a Policy is issued on the basis of a
standard premium class, while limited guidance exists, the Company believes
that the Policy should qualify as a life insurance contract for Federal income
tax purposes. However, if a Policy is issued on a substandard basis, it is
unclear whether or not such a Policy would qualify as a life insurance contract
for Federal income tax purposes. Assuming that the Policy qualifies as a life
insurance contract for Federal income tax purposes, the Company believes the
Cash Value of the Policy should be subject to the same Federal income tax
treatment as the Cash Value of a conventional fixed-benefit contract. If so,
the Owner is not considered to be in constructive receipt of the Cash Value
under the Policy until there is a distribution. A change of Owners, a
surrender, a partial withdrawal, a pro rata surrender, a lapse with outstanding
Indebtedness, or an exchange may have tax consequences, depending on the
particular circumstances. (See Federal Tax Matters.)
A Policy may be treated as a "modified endowment contract" depending upon the
amount of premiums paid in relation to the death benefit. If the Policy is a
modified endowment contract, then all pre-death distributions, including
Policy Loans and due but unpaid loan interest, will be treated first as a
distribution of taxable income and then as a return of basis or investment in
the contract. In addition, prior to the Owner's age 59 1/2, taxable income
from such distributions generally will be subject to a 10% additional tax.
If the Policy is not a modified endowment contract, distributions generally
will be treated first as a return of basis or investment in the contract and
then as disbursing taxable income. Moreover, loans will not be treated as
distributions. Finally, neither distributions nor loans from a Policy that
is not a modified endowment contract are subject to the 10% additional tax.
(See Federal Tax Matters.)
DIVIDENDS. We do not anticipate that the Policy will share in the divisible
surplus of the Company in the form of a dividend. (See Dividends.)
* * *
This Prospectus describes only those aspects of the Policy that relate to the
Separate Account, except where General Account matters are specifically
mentioned. For a brief summary of the aspects of the Policy relating to the
General Account, see The General Account.
THE COMPANY AND THE SEPARATE ACCOUNT
THE COMPANY
General American Life Insurance Company ("General American" or "the Company")
was originally incorporated as a stock company in 1933. In 1936, General
American initiated a program to convert to a mutual life insurance company.
In 1997, General American's policyholders approved a reorganization of the
Company into a mutual holding company structure under which General American
became a stock company wholly owned by GenAmerica Corporation, an
intermediate stock holding company. GenAmerica is wholly owned by General
American Mutual Life Insurance Company, a mutual holding company organized
under Missouri
5
<PAGE> 11
law. The mutual holding company structure retains mutuality as General
American's ultimate parent company is wholly owned by General American's
policyholders.
General American is principally engaged in writing individual and group life
insurance policies and annuity contracts. As of December 31, 1997, it had
consolidated assets of approximately $24 Billion. It is admitted to do
business in 49 states, the District of Columbia, Puerto Rico, and in ten
Canadian provinces. The principal offices of General American are located at
700 Market Street, St. Louis, Missouri 63101. The mailing address of General
American's service center ("the Home Office") is P.O. Box 14490, St. Louis,
Missouri 63178.
THE SEPARATE ACCOUNT
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other classes of flexible premium variable life
insurance policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit investment
trust under the Investment Company Act of 1940 ("the 1940 Act") and meets the
definition of a "separate account" under Federal securities laws.
Registration with the SEC does not involve supervision of the management or
investment practices or policies of the Separate Account or General American
by the SEC.
The Separate Account currently is divided into twenty-four Divisions.
Divisions invest in corresponding Funds from one of seven open-end,
diversified management investment companies: (1) General American Capital
Company, (2) Russell Insurance Funds, (3) American Century Variable
Portfolios, (4) J.P. Morgan Series Trust II, (5) Variable Insurance Products
Fund, (6) Variable Insurance Products Fund II, and (7) Van Eck Worldwide
Insurance Trust. Income and both realized and unrealized gains or losses
from the assets of each Division of the Separate Account are credited to or
charged against that Division without regard to income, gains, or losses from
any other Division of the Separate Account or arising out of any other
business General American may conduct.
Although the assets of the Separate Account are the property of General
American, the assets in the Separate Account equal to the reserves and other
liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate
Account that exceed the reserves and the Policy liabilities of the Separate
Account (which will always be at least equal to the aggregate Policy value
allocated to the Separate Account under the Policies). Before making any
such transfers, General American will consider any possible adverse impact
the transfer may have on the Separate Account.
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company ("the Capital Company") is an open-end,
diversified management investment company which was incorporated in Maryland
on November 15, 1985, and commenced operations on October 1, 1987. Only the
Capital Company Funds described in this section of the Prospectus are
currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for the Capital Company.
Shares of Capital Company are currently offered to separate accounts
established by General American Life Insurance Company and affiliates. The
Capital Company's investment Advisor is Conning Asset Management Company
("the Advisor"), an indirect majority-owned subsidiary of General American.
The Advisor selects investments for the Funds.
The investment objectives and policies of each Fund are summarized below:
S&P 500 INDEX FUND: The investment objective of this Fund is to provide
investment results that parallel the price and yield performance of
publicly-traded common stocks in the aggregate. The Fund uses the
Standard & Poor's Composite Index of 500 Stocks ( "the S&P Index") as its
standard for performance comparison. The Fund attempts to duplicate the
performance of the S&P Index and includes dividend income as a component
of the Fund's total return. The Fund is not managed by Standard & Poor's.
THE MONEY MARKET FUND: The investment objective of the Money Market
Fund is to obtain the highest level of current income which is consistent
with the preservation of capital and maintenance of liquidity. The Fund
invests primarily in high-quality, short-term money market instruments.
An investment in the
6
<PAGE> 12
Money Market Fund is neither insured nor guaranteed by the U. S.
Government.
BOND INDEX FUND: The investment objective of this Fund is to provide a
rate of return that reflects the performance of the publicly-traded bond
market as a whole. The Fund uses the Lehman Brothers Government/Corporate
Bond Index as its standard for performance comparison.
MANAGED EQUITY FUND: The investment objective of this Fund is long-term
growth of capital, obtained by investing primarily in common stocks.
Securing moderate current income is a secondary objective.
ASSET ALLOCATION FUND: The investment objective of this Fund is a high
rate of long-term total return composed of capital growth and income
payments. Preservation of capital is the secondary objective and chief
limit on investment risk. The Fund will invest only in those types of
securities that the other Capital Company Funds may invest in. The Asset
Allocation Fund invests in a combination of common stocks, bonds, or money
market instruments in accordance with guidelines established from time to
time by Capital Company's Board of Directors.
INTERNATIONAL INDEX FUND: The investment objective of this Fund is
obtain investment results that parallel the price and yield performance of
publicly-traded common stocks in the Morgan Stanley Capital International
("MSCI") Europe, Australia and Far East Index ("EAFE").
MID-CAP EQUITY FUND: The investment objective of this Fund is capital
appreciation. It pursues this objective by investing primarily in common
stocks of United States-based, publicly traded companies with medium
market capitalizations falling within the capitalization range of the S&P
Mid-Cap 400 at the time of the Fund's investment.
SMALL-CAP EQUITY FUND: The investment objective of this Fund is to
provide a rate of return that corresponds to the performance of the common
stock of small companies, while incurring a level of risk that is
generally equal to the risks associated with small company common stock.
The Fund attempts to duplicate the performance of the smallest 20% of
companies, based on capitalization size, that are based in the United
States and listed on the New York Stock Exchange ("NYSE").
RUSSELL INSURANCE FUNDS
Russell Insurance Funds ("RIF") is organized as a Massachusetts business
trust under a Master Trust Agreement dated July 11, 1996. RIF is authorized
to issue an unlimited number of shares evidencing beneficial interests in
different investment Funds, which interests may be offered in one or more
classes. RIF is a diversified open end management investment company,
commonly known as a "mutual fund." Frank Russell Company, which is a
consultant to RIF, has been primarily engaged since 1969 in providing asset
management consulting services to large corporate employee benefit funds.
Major components of its consulting services are: (i) quantitative and
qualitative research and evaluation aimed at identifying the most appropriate
investment management firms to invest large pools of assets in accord with
specific investment objectives and styles; and (ii) the development of
strategies for investing assets using "multi-style, multi-manager
diversification." This is a method for investing large pools of assets by
dividing the assets into segments to be invested using different investment
styles, and selecting money managers for each segment based upon their
expertise in that style of investment. General management of RIF is provided
by Frank Russell Investment Management Company, a wholly-owned subsidiary of
Frank Russell Company, which furnishes officers and staff required to manage
and administer RIF on a day-to-day basis.
The investment objectives and policies of each Fund are summarized below:
MULTI-STYLE EQUITY FUND: The investment objective of this Fund is to
provide income and capital growth by investing principally in equity
securities.
AGGRESSIVE EQUITY FUND: This Fund seeks to provide capital
appreciation by assuming a higher level of volatility than is ordinarily
expected from the Multi-Style Equity Fund while still investing in equity
securities.
NON-U.S. FUND: This Fund's objective is to provide favorable total
return and additional diversification for U.S. investors by investing
primarily in equity and fixed-income securities of non-U.S. companies, and
securities issued by non-U.S. governments.
CORE BOND FUND: This Fund's objective is to maximize total return,
through capital appreciation and income, by assuming a level of volatility
consistent with the broad fixed-income market. The Fund invests in
fixed-income securities.
7
<PAGE> 13
AMERICAN CENTURY VARIABLE PORTFOLIOS
American Century Variable Portfolios, Inc., a part of American Century
Investments, was organized as a Maryland corporation on June 4, 1987. It is
a diversified, open-end management investment company. Its business and
affairs are managed by its officers under the Direction of its Board of
Directors. American Century Investment Management, Inc. serves as the
investment manager of the fund.
The investment objective and policies of the Funds are summarized below:
INCOME & GROWTH FUND: The investment objective of this Fund is to
attain long-term growth of capital as well as current income. The Fund
pursues a total return and dividend yield that exceed those of the S&P 500
by investing in stocks of companies with strong dividend growth potential.
Dividends are paid monthly.
INTERNATIONAL FUND: This Fund seeks capital growth over time by investing
in common stocks of foreign companies considered to have
better-than-average prospects for appreciation. Because the Fund invests
in foreign securities, a higher degree of short-term price volatility, or
risk, is expected due to factors such as currency fluctuation and
political instability.
VALUE FUND: This Fund is a core equity fund that seeks long-term
capital growth. Income is a secondary objective. To pursue its
objectives, the fund invests primarily in equity securities of
well-established companies that are believed by management to be
undervalued at the time of purchase. Please note that this is an equity
investment and, by nature, may fluctuate in value.
J.P. MORGAN SERIES TRUST II
J.P. Morgan Series Trust II is an open-end diversified management investment
company organized as a Delaware Business Trust. The Trust's investment
adviser is Morgan, a registered investment adviser. Morgan is a wholly owned
subsidiary of J.P. Morgan & Co., Incorporated, a bank holding company
organized under the laws of Delaware.
The investment objective and policies of the Funds are summarized below:
BOND PORTFOLIO: This Fund seeks to provide a high total return
consistent with moderate risk of capital and maintenance of liquidity.
The Fund is designed for investors who seek a total return over time that
is higher than that generally available from a portfolio of short-term
obligations while acknowledging the greater price fluctuation of
longer-term instruments.
SMALL COMPANY PORTFOLIO: The investment objective of this Fund is to
provide high total return from a portfolio of equity securities of small
companies. The Fund invests at least 65% of the value of its total assets
in the common stock of small U.S. Companies primarily with market
capitalizations less than $1 billion. The Fund is designed for investors
who are willing to assume the somewhat higher risk of investing in small
companies in order to seek a higher return over time than might be
expected from a portfolio of stocks of large companies.
VARIABLE INSURANCE PRODUCTS FUND
Variable Insurance Products Fund ("VIP") is an open-end, diversified
management investment company organized as a Massachusetts business trust on
November 13, 1981. Only the Funds described in this section of the
Prospectus are currently available as investment choices for this Policy even
though additional Funds may be described in the prospectus for VIP. VIP
shares are purchased by insurance companies to fund benefits under variable
insurance and annuity policies. Fidelity Management & Research Company
("FMR") of Boston, Massachusetts is the Funds' Manager.
The investment objectives and policies of each Fund are summarized below:
EQUITY-INCOME PORTFOLIO: The investment objective of this Fund is
income, obtained by investing primarily in income-producing equity
securities. In choosing these securities, FMR will also consider the
potential for capital appreciation. The Fund's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the
Standard & Poor's Composite Index of 500 Stocks.
GROWTH PORTFOLIO: The investment objective of this Fund is capital
appreciation. The Fund normally purchases common stocks, although its
investments are not restricted to any one type of security. Capital
appreciation may also be obtained from other types of securities,
including bonds and preferred stocks.
OVERSEAS PORTFOLIO: The investment objective of this Fund is long-term
growth of capital. The Fund invests primarily in foreign securities. The
Overseas Portfolio provides a means for investors to diversify their own
portfolios by participation in companies and economies outside Of the
United States.
8
<PAGE> 14
HIGH INCOME PORTFOLIO: The investment objective of this Fund is a
high level of current income. The Fund seeks to fulfill the objective by
investing primarily in high-yielding, lower-rated, fixed-income
securities, while also considering growth of capital. Lower-rated
securities, commonly referred to as "junk bonds," involve greater risk
of default or price change than securities assigned a higher quality
rating.
VARIABLE INSURANCE PRODUCTS FUND II
Variable Insurance Products Fund II ("VIP II") is an open-end, diversified
management investment company organized as a Massachusetts business trust on
March 21, 1988. Only the Fund described in this section of the Prospectus is
currently available as an investment choice for this Policy even though
additional Funds may be described in the prospectus for VIP II. VIP II
shares are purchased by insurance companies to fund benefits under variable
insurance and annuity policies. FMR is the Fund's manager.
The investment objective and policies of the Funds are summarized below:
ASSET MANAGER: The investment objective of this Fund is to seek a high
total return with reduced risk over the long-term by allocating its assets
among domestic and foreign stocks, bonds, and short-term fixed income
instruments.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust ("Van Eck") is an open-end management
investment company organized as a Massachusetts business trust on January 7,
1987. Only the Funds described in this section of the Prospectus is
currently available as an investment choice for this Policy even though
additional Funds may be described in the prospectus for Van Eck. Shares of
Van Eck are offered only to separate accounts of various insurance companies
to support benefits of variable insurance and annuity policies. The assets
of Van Eck are managed by Van Eck Associates Corporation of New York, New
York.
The investment objectives and policies of the Fund are summarized below:
WORLDWIDE HARD ASSETS FUND: The investment objective of the Fund is
to seek long-term capital appreciation by investing in equity and debt
securities of companies engaged in the exploration, development,
production, and distribution of one or more of the following: (i)
precious metals, (ii) ferrous and non-ferrous metals, (iii) oil and
gas, (iv) forest products, (v) real estate, and (vi) other basic
non-agricultural commodities (together, "Hard Assets"). Current income
is not an objective.
WORLDWIDE EMERGING MARKETS FUND: The investment objective of this
Fund is to obtain long-term capital appreciation by investing in equity
securities in emerging markets around the world. The Fund emphasizes
primarily investment in countries that, compared to the world's major
economies, exhibit relatively low gross national product per capita, as
well as the potential for rapid economic growth.
THERE IS NO ASSURANCE THAT ANY OF THE FUNDS WILL ACHIEVE ITS STATED
OBJECTIVE. It is conceivable that in the future it may be disadvantageous
for Funds to offer shares to separate accounts of various insurance companies
to serve as the investment medium for their variable products or for both
variable life and annuity separate accounts to invest simultaneously in
Capital Company. The Boards of Trustees of RIF, FMR, and Van Eck, the Boards
of Directors of Capital Company, American Century, and J.P. Morgan, the
respective Advisors of each Fund, and the Company and any other insurance
companies participating in the Funds are required to monitor events to
identify any material irreconcilable conflicts that may possibly arise, and
to determine what action, if any, should be taken in response to those events
or conflicts. A more detailed description of the Funds, their investment
policies, restrictions, risks, and charges is in the prospectuses for each
Fund, which must accompany or precede this Prospectus and which should be
read carefully.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
The Company reserves the right, subject to compliance with applicable law, to
make additions to, deletions from, or substitutions for the shares that are
held by the Separate Account or that the Separate Account may purchase. The
Company reserves the right to eliminate the shares of any of the Funds and to
substitute shares of another Fund of Capital Company, RIF, VIP, VIP II, Van
Eck, American Century, J.P. Morgan or of another registered open-end
investment company if the shares of a Fund are no longer available for
investment or if in its judgment further investment in any Fund becomes
inappropriate in view of the purposes of the Separate Account. The Company
will not substitute any shares attributable to an Owner's interest in a
Division of the Separate Account without notice to the Owner and prior
approval of the SEC, to the extent required by the 1940 Act or other
applicable law. Nothing contained in this Prospectus shall prevent the
Separate Account from purchasing other securities for other series or
9
<PAGE> 15
classes of policies, or from permitting a conversion between series or classes
of policies on the basis of requests made by Owners.
The Company also reserves the right to establish additional Divisions of the
Separate Account, each of which would invest in a new Fund with a specified
investment objective. New Divisions may be established when, in the sole
discretion of the Company, marketing needs or investment conditions warrant.
Any new Division will be made available to existing Owners on a basis to be
determined by the Company. To the extent approved by the SEC, the Company
may also eliminate or combine one or more Divisions, substitute one Division
for another Division, or transfer assets between Divisions if, in its sole
discretion, marketing, tax, or investment conditions warrant.
In the event of a substitution or change, the Company may, if it considers it
necessary, make such changes in the Policy by appropriate endorsement and
offer conversion options required by law, if any. The Company will notify
all Owners of any such changes.
If deemed by the Company to be in the best interests of persons having voting
rights under the Policy, and to the extent any necessary SEC approvals or
Owner votes are obtained, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) de-registered under that Act in
the event such registration is no longer required; or (c) combined with other
separate accounts of the Company. To the extent permitted by applicable law,
the Company may also transfer the assets of the Separate Account associated
with the Policy to another separate account.
POLICY BENEFITS
DEATH BENEFIT
As long as the Policy remains in force (See Payment and Allocation of
Premiums - Policy Lapse and Reinstatement), the Company will, upon receipt at
its Home Office of proof of the Last Insured's death, pay the death benefit in
a lump sum. The amount of the death benefit payable will be determined at the
end of the Valuation Period during which the Last Insured's death occurred.
The death benefit will be paid to the surviving Beneficiary or Beneficiaries
specified in the application or as subsequently changed.
The Policy provides three death benefit options: "Death Benefit Option A,"
"Death Benefit Option B," and "Death Benefit Option C." The death benefit
under all options will never be less than the current Face Amount of the
Policy (less Indebtedness) as long as the Policy remains in force. (See
Payment and Allocation of Premiums - Policy Lapse and Reinstatement.) The
minimum Face Amount currently is $100,000.
DEATH BENEFIT OPTION A. Under Death Benefit Option A, the death benefit
until the younger Insured reaches Attained Age 100 is the current Face Amount
of the Policy or, if greater, the applicable percentage of Cash Value on the
date of death. At the younger Insured's Attained Age 100 and above, the
death benefit is 101% of the Cash Value. The applicable percentage is 250%
for a younger Insured Attained Age 40 or below on the Policy Anniversary
prior to the date of death. For younger Insureds with an a Attained Age over
40 on that Policy Anniversary, the percentage is lower and declines with age
as shown in the Applicable Percentage of Cash Value Table shown below.
Accordingly, under Death Benefit Option A the death benefit will remain level
at the Face Amount unless the applicable percentage of Cash Value exceeds the
current Face Amount, in which case the amount of the death benefit will vary
as the Cash Value varies. (See Illustrations of Death Benefits and Cash
Values, Appendix A.)
DEATH BENEFIT OPTION B. Under Death Benefit Option B, the death benefit
until the younger Insured reaches Attained Age 100 is equal to the current
Face Amount plus the Cash Value of the Policy on the date of death or, if
greater, the applicable percentage of the Cash Value on the date of death.
At the younger Insured's Attained Age 100 and above, the death benefit is
101% of the Cash Value. The applicable percentage is the same as under Death
Benefit Option A: 250% for a younger Insured Attained Age 40 or below on
the Policy Anniversary prior to the date of death, and for younger Insureds
with an Attained Age over 40 on that Policy Anniversary the percentage
declines as shown in the Applicable Percentage of Cash Value Table shown
below. Accordingly, under Death Benefit Option B the amount of the death
benefit will always vary as the Cash Value varies (but will never be less
than the Face Amount). (See Illustrations of Death Benefits and Cash Values,
Appendix A.)
<TABLE>
- -------------------------------------------------------------------------
APPLICABLE PERCENTAGE OF CASH VALUE TABLE<F*>
- -------------------------------------------------------------------------
<CAPTION>
Younger Insured Policy Account Multiple
Person's Age Percentage
- -------------------------------------------------------------------------
<C> <C>
40 or under 250%
- -------------------------------------------------------------------------
45 215%
- -------------------------------------------------------------------------
50 185%
- -------------------------------------------------------------------------
55 150%
- -------------------------------------------------------------------------
60 130%
- -------------------------------------------------------------------------
65 120%
- -------------------------------------------------------------------------
70 115%
- -------------------------------------------------------------------------
78 to 90 105%
- -------------------------------------------------------------------------
95 or older 101%
- -------------------------------------------------------------------------
10
<PAGE> 16
<FN>
<F*>For ages that are not shown on this table, the applicable percentage
multiples will decrease by a ratable portion for each full year.
</TABLE>
DEATH BENEFIT OPTION C. Under Death Benefit Option C, the death benefit is
equal to the current Face Amount of the Policy or, if greater, the Cash Value
on the date of death multiplied by the "Attained Age factor" for the younger
Insured (a list of sample Attained Age factors is shown in the Sample
Attained Age Factor Table below). At the younger Insured's Attained Age 100
and above, the death benefit is 101% of the Cash Value. Accordingly, under
Death Benefit Option C the death benefit will remain level at the Face Amount
unless the Cash Value multiplied by the younger Insured's Attained Age factor
exceeds the current Face Amount, in which case the amount of the death
benefit will vary as the Cash Value varies. (See Illustrations of Death
Benefits and Cash Values, Appendix A.)
<TABLE>
- -----------------------------------------------
DEATH BENEFIT OPTION C
SAMPLE ATTAINED AGE FACTOR TABLE
BASED ON MALE AND FEMALE INSUREDS
BOTH AGE 35 AT ISSUE, STANDARD SMOKER RATES
<CAPTION>
- -----------------------------------------------
ATTAINED AGE LIVES FACTOR
- -----------------------------------------------
<S> <C>
35 5.641840
- -----------------------------------------------
40 4.640444
- -----------------------------------------------
45 3.825569
- -----------------------------------------------
50 3.166936
- -----------------------------------------------
55 2.638797
- -----------------------------------------------
60 2.220327
- -----------------------------------------------
65 1.891312
- -----------------------------------------------
70 1.640024
- -----------------------------------------------
75 1.449651
- -----------------------------------------------
80 1.314918
- -----------------------------------------------
85 1.219345
- -----------------------------------------------
90 1.152999
- -----------------------------------------------
95 1.090450
- -----------------------------------------------
100+ 1.010000
- -----------------------------------------------
</TABLE>
CHANGES IN DEATH BENEFIT OPTION. If the Policy was issued with either Death
Benefit Option A or Death Benefit Option B, the death benefit option may be
changed. A request for change must be made to the Company in writing. The
effective date of such a change will be the Monthly Anniversary on or
following the date the Company receives the change request. A change in
death benefit option may have Federal income tax consequences. (See Federal
Tax Matters.)
A Death Benefit Option A Policy may change its death benefit option to Death
Benefit Option B. The Face Amount will be decreased to equal the death
benefit less the Cash Value on the effective date of change. A Death Benefit
Option B Policy may change its death benefit option to Death Benefit Option
A. The Face Amount will be increased to equal the death benefit on the
effective date of change. A Policy issued under Death Benefit Option C may
not change to either Death Benefit Option A or Death Benefit Option B for the
entire lifetime of the Contract. Similarly, a Policy issued under either
Death Benefit Option A or B may not change to Death Benefit Option C for the
lifetime of the Policy.
Satisfactory evidence of insurability must be submitted to the Company in
connection with a request for a change from Death Benefit Option A to Death
Benefit Option B. A change may not be made if it would result in a Face
Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an immediate
change in the amount of a Policy's death benefit or Cash Value. (See Monthly
Deduction - Cost of Insurance.)
REDUCTION IN FACE AMOUNT. Subject to certain limitations set forth below, an
Owner may decrease (but not increase) the Face Amount of a Policy once each
Policy Year, but not before the first Policy Anniversary. A written request is
required for a reduction in the Face Amount. A reduction in Face Amount may
affect the cost of insurance rate and the net amount at risk, both of which
affect an Owner's cost of insurance charge. (See Monthly Deduction - Cost of
Insurance.) A reduction in the Face Amount of a Policy may have Federal income
tax consequences. (See Federal Tax Matters.)
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company.
The amount of the requested decrease must be at least $5,000 ($2,000 for
policies issued in qualified pension plans) and the Face Amount remaining in
force after any requested decrease may not be less than minimum Face Amount.
If following a decrease in Face Amount, the Policy would not comply with the
maximum premium limitations required by Federal tax law (see Payment and
Allocation of Premiums), the decrease may be limited or Cash Value may be
returned to the Owner (at the Owner's election), to the extent necessary to
meet these requirements. (See Monthly Deduction - Cost of Insurance; and
Charges and Deductions - Contingent Deferred Sales Charge.)
PAYMENT OF THE DEATH BENEFIT. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters - Postponement
11
<PAGE> 17
of Payment from the Separate Account.) The death benefit will be increased by
any unpaid dividends determined prior to the Last Insured's death, and by the
amount of the monthly cost of insurance for the portion of the month from the
date of death to the end of the month, and reduced by any outstanding
Indebtedness. (See General Matters - Additional Insurance Benefits,
Dividends, and Charges and Deductions.) The Company will pay interest on the
death benefit from the date of the Last Insured's death to the date of
payment. Interest will be at an annual rate determined by the Company, but
will never be less than the guaranteed rate of 4%. Provisions for settlement
of proceeds other than a lump sum payment may only be made upon written
agreement with the Company.
CASH VALUE
The Cash Value of the Policy is equal to the total of the amounts credited to
the Owner in the Separate Account, the Loan Account (securing Policy Loans),
and, in certain contracts, the General Account. The Policy's Cash Value in
the Separate Account will reflect the investment performance of the chosen
Divisions of the Separate Account as measured by each Division's Net
Investment Factor (defined below), the frequency and amount of Net Premiums
paid, transfers, partial withdrawals, loans and the charges assessed in
connection with the Policy. An Owner may at any time surrender the Policy
and receive the Policy's Cash Surrender Value. (See Policy Rights -
Surrender, Partial Withdrawals, and Pro Rata Surrender.) The Policy's Cash
Value in the Separate Account equals the sum of the Policy's Cash Values in
each Division. There is no guaranteed minimum Cash Value.
DETERMINATION OF CASH VALUE. Cash Value is determined on each Valuation
Date. On the Investment Start Date, the Cash Value in a Division will equal
the portion of any Net Premium allocated to the Division, reduced by the
portion allocated to that Division of the monthly deduction(s) due from the
Issue Date through the Investment Start Date. (See Payment and Allocation of
Premiums.) Thereafter, on each Valuation Date, the Cash Value in a Division
of the Separate Account will equal:
(1) The Cash Value in the Division on the preceding Valuation Date,
multiplied by the Division's Net Investment Factor (defined below) for the
current Valuation Period; plus
(2) Any Net Premium payments received during the current Valuation
Period which are allocated to the Division; plus
(3) Any loan repayments allocated to the Division during the current
Valuation Period; plus
(4) Any amounts transferred to the Division from the General Account or
from another Division during the current Valuation Period; plus
(5) That portion of the interest credited on outstanding loans which is
allocated to the Division during the current Valuation Period; minus
(6) Any amounts transferred from the Division to the General Account,
Loan Account, or to another Division during the current Valuation Period
(including any transfer charges); minus
(7) Any partial withdrawals from the Division during the current
Valuation Period; minus
(8) Any withdrawal due to a pro rata surrender from the Division during
the current Valuation Period; minus
(9) Any withdrawal or surrender charges incurred during the current
Valuation Period attributed to the Division in connection with a partial
withdrawal or pro rata surrender; minus
(10) If a Monthly Anniversary occurs during the current Valuation Period,
the portion of the monthly deduction allocated to the Division during the
current Valuation Period to cover the Policy Month which starts during
that Valuation Period (See Charges and Deductions.); plus
(11) If a Policy Anniversary occurs during the current Valuation Period,
the portion of the dividend paid, if any, allocated to the Division.
NET INVESTMENT FACTOR: The Net Investment Factor measures the investment
performance of a Division during a Valuation Period. The Net Investment
Factor for each Division for a Valuation period is calculated as follows:
(1) The value of the assets at the end of the preceding Valuation
Period; plus
(2) The investment income and capital gains, realized or unrealized,
credited to the assets in the Valuation Period for which the Net Investment
Factor is being determined; minus
(3) The capital losses, realized or unrealized, charged against those
assets during the Valuation Period; minus
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<PAGE> 18
(4) Any amount charged against each Division for taxes, including any
tax or other economic burden resulting from the application of the tax
laws determined by the Company to be properly attributable to the
Divisions of the Separate Account, or any amount set aside during the
Valuation Period as a reserve for taxes attributable to the operation or
maintenance of each Division; minus
(5) A charge equal to a percentage of the average net assets for each
day in the Valuation Period. This charge, for mortality and expense
risks, is determined by the length of time the policy has been in force.
It will not exceed the amounts shown in the following table:
Policy Percentage of Effective
Years Avg. Net Assets Annual Rate
1-10 0.0015027 0.55%
11-20 0.0012301 0.45%
21+ 0.0009572 0.35%;
divided by
(6) The value of the assets at the end of the preceding Valuation
Period.
POLICY RIGHTS
LOANS
LOAN PRIVILEGES. The Owner may, by written request to General American,
borrow an amount up to the Loan Value of the Policy, with the Policy serving
as sole security for such loan. A loan taken from, or secured by, a Policy
may have Federal income tax consequences. (See Federal Tax Matters.)
The Loan Value is the Cash Value of the Policy on the date the loan request
is received, less interest to the next loan interest due date, less
anticipated monthly deductions to the next loan interest due date, less any
existing loan, less any surrender charge, plus interest expected to be earned
on the loan balance to the next loan interest due date. Policy Loan interest
is payable on each Policy Anniversary.
The minimum amount that may be borrowed is $500. The loan may be completely
or partially repaid at any time while the Insured is living. Any amount due
to an Owner under a Policy Loan ordinarily will be paid within seven days
after General American receives the loan request at its Home Office, although
payments may be postponed under certain circumstances. (See General
Matters-Postponement of Payments from the Separate Account.)
When a Policy Loan is made, Cash Value equal to the amount of the loan plus
interest due will be transferred to the Loan Account as security for the
loan. A Loan Subaccount exists within the Loan Account for the General
Account and each Division of the Separate Account. Amounts transferred to
the Loan Account to secure Indebtedness are allocated to the appropriate Loan
Subaccount to reflect its origin. Unless the Owner requests a different
allocation, amounts will be transferred from the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account, if any, bears to the Policy's
total Cash Value, less the Cash Value in the Loan Account, at the end of the
Valuation Period during which the request for a Policy Loan is received.
This will reduce the Policy's Cash Value in the General Account and Separate
Account. These transactions will not be considered transfers for purposes of
the limitations on transfers between Divisions or to or from the General
Account.
Cash Value in the Loan Account is expected to earn interest at a rate ("the
earnings rate") which is lower than the rate charged on the Policy Loan ("the
borrowing rate"). Cash Value in the Loan Account will accrue interest daily
at an earnings rate of 4%.
Interest credited on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest
credited will also be transferred: (1) when a new loan is made; (2) when a
loan is partially or fully repaid; and (3) when an amount is needed to meet a
monthly deduction.
INTEREST CHARGED. The borrowing rate we charge for Policy Loan interest will
be based on the following schedule:
FOR LOANS ANNUAL
OUTSTANDING DURING INTEREST RATE
Policy Years 1-10 4.50%
Policy Years 11-20 4.25%
Policy Years 21+ 4.15%
General American will inform the Owner of the current borrowing rate when a
Policy Loan is made.
Policy Loan interest is due and payable annually on each Policy Anniversary.
If the Owner does not pay the interest when it is due, the unpaid loan
interest will be added to the outstanding Indebtedness as of the due date and
will be charged interest at the same rate as the rest of the Indebtedness.
(See Effect of Policy Loans below.) The amount of Policy Loan interest which
is transferred to the Loan Account will be deducted from the Divisions of the
Separate Account and from the General Account in the same proportion that the
portion of the Cash Value in each Division and in the General Account,
respectively,
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<PAGE> 19
bears to the total Cash Value of the Policy minus the Cash Value in the Loan
Account.
EFFECT OF POLICY LOANS. Whether or not a Policy Loan is repaid, it will
permanently affect the Cash Value of a Policy, and may permanently affect the
amount of the death benefit. The collateral for the loan (the amount held in
the Loan Account) does not participate in the performance of the Separate
Account while the loan is outstanding. If the Loan Account earnings rate is
less than the investment performance of the selected Division(s), the Cash
Value of the Policy will be lower as a result of the Policy Loan.
Conversely, if the Loan Account earnings rate is higher than the investment
performance of the Division(s), the Cash Value may be higher.
In addition, if the Indebtedness (See Definitions) exceeds the Cash Value
minus the surrender charge on any Monthly Anniversary, the Policy will lapse,
subject to a grace period. (See Payment and Allocation of Premiums - Policy
Lapse and Reinstatement.) A sufficient payment must be made within the later
of the grace period of 62 days from the Monthly Anniversary immediately
before the date Indebtedness exceeds the Cash Value less any surrender
charges, or 31 days after notice that a Policy will terminate unless a
sufficient payment has been mailed, or the Policy will lapse and terminate
without value. A lapsed Policy, however, may later be reinstated subject to
certain limitations. (See Payment and Allocation of Premiums - Policy Lapse
and Reinstatement.)
Any outstanding Indebtedness will be deducted from the proceeds payable upon
the death of the Last Insured or the surrender of the Policy.
REPAYMENT OF INDEBTEDNESS. A Policy Loan may be repaid in whole or in part
at any time prior to the death of the Last Insured and as long as a Policy is
in force. When a loan repayment is made, an amount securing the Indebtedness
in the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that the Cash Value in each Loan Subaccount bears to Cash Value in
the Loan Account. Amounts paid while a Policy Loan is outstanding will be
treated as premiums unless the Owner requests in writing that they be treated
as repayment of Indebtedness.
SURRENDER, PARTIAL WITHDRAWALS AND PRO RATA SURRENDER
At any time during the lifetime of the Last Insured and while a Policy is in
force, the Owner may surrender the Policy by sending a written request to the
Company. After the first Policy Year, an Owner may make a partial withdrawal
by sending a written request to the Company. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender, partial withdrawal,
or a pro rata surrender will ordinarily be paid within seven days of receipt
of the written request. (See General Matters - Postponement of Payments from
the Separate Account.)
SURRENDERS. To effect a surrender, either the Policy itself must be returned
to the Company along with the request, or the request must be accompanied by
a completed affidavit of loss, which is available from the Company. Upon
surrender, the Company will pay the Cash Surrender Value plus any unpaid
dividends determined prior to surrender (See Dividends) to the Owner in a
single sum. The Cash Surrender Value equals the Cash Value on the date of
surrender, less any Indebtedness, and less any surrender charge. (See
Charges and Deductions - Contingent Deferred Sales Charge.) The Company will
determine the Cash Surrender Value as of the date that an Owner's written
request is received at the Company's Home Office. If the request is received
on a Monthly Anniversary, the monthly deduction otherwise deductible will be
included in the amount paid. Coverage under a Policy will terminate as of
the date of surrender. The Last Insured must be living at the time of a
surrender. A surrender may have Federal income tax consequences. (See
Federal Tax Matters.)
PARTIAL WITHDRAWALS. After the first Policy Year, an Owner may make partial
withdrawals from the Policy's Cash Surrender Value. There is no charge for
the first twelve partial withdrawals or transfers in a Policy Year. General
American may impose a charge not to exceed the amount specified in the Policy
for each partial withdrawal or transfer in excess of twelve in a Policy Year.
A partial withdrawal may have Federal income tax consequences. (See Federal
Tax Matters.)
The minimum amount of a partial withdrawal request, net of any applicable
surrender charges, is the lesser of a) $500 from a Division of the Separate
Account, or b) the Policy's Cash Value in a Division. (See Charges and
Deductions - Contingent Deferred Sales Charge.) Partial withdrawals made
during a Policy Year may not exceed the following limits. The maximum amount
that may be withdrawn from a Division of the Separate Account is the Policy's
Cash Value net of any applicable surrender charges in that Division. The
total partial withdrawals and transfers from the General Account over the
Policy Year may not exceed a maximum amount equal to the greatest of the
following: (1) 25% of the Cash Surrender
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<PAGE> 20
Value in the General Account at the beginning of the Policy Year, multiplied
by the withdrawal percentage limit shown in the policy, or (2) the previous
Policy Year's maximum amount.
The Owner may allocate the amount withdrawn plus any applicable surrender
charge, subject to the above conditions, among the Divisions of the Separate
Account and the General Account. If no allocation is specified, then the
partial withdrawal will be allocated among the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account bears to the total Cash Value
of the Policy, less the Cash Value in the Loan Account, on the date the
request for the partial withdrawal is received. If the limitations on
withdrawals from the General Account will not permit this proportionate
allocation, the Owner will be requested to provide an alternate allocation.
(See The General Account.)
No amount may be withdrawn that would result in there being insufficient Cash
Value to meet any surrender charge that would be payable immediately
following the withdrawal upon the surrender of the remaining Cash Value.
The death benefit will be affected by a partial withdrawal, unless Death
Benefit Option A or Option C is in effect and the withdrawal is made under
the terms of an Anniversary Partial Withdrawal Rider. If Death Benefit
Option A or Death Benefit Option C is in effect and the death benefit equals
the Face Amount, then a partial withdrawal will decrease the Face Amount by
an amount equal to the partial withdrawal plus the applicable surrender
charge resulting from that partial withdrawal. If the death benefit is based
on a percentage of the Cash Value, then a partial withdrawal will decrease
the Face Amount by an amount by which the partial withdrawal plus the
applicable surrender charge exceeds the difference between the death benefit
and the Face Amount. If Death Option B is in effect, the Face Amount will
not change.
The Face Amount remaining in force after a partial withdrawal may not be less
than the minimum Face Amount. Any request for a partial withdrawal that
would reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance charge
is calculated and the amount of pure insurance protection afforded under a
Policy. (See Monthly Deduction - Cost of Insurance.) The Company may change
the minimum amount required for a partial withdrawal or the number of times
partial withdrawals may be made.
PRO RATA SURRENDER. After the first Policy Year, an Owner can make a pro
rata surrender of the Policy. The pro rata surrender will reduce the Face
Amount and the Cash Value by a percentage chosen by the Owner. This
percentage must be any whole number. A pro rata surrender may have Federal
income tax consequences. (See Federal Tax Matters.) The percentage will be
applied to the Face Amount and the Cash Value on the Monthly Anniversary on
or following our receipt of the request.
The Owner may allocate the amount of decrease in Cash Value plus any
applicable surrender charge among the Divisions of the Separate Account and
the General Account. (See Charges and Deductions - Contingent Deferred Sales
Charge.) If no allocation is specified, then the decrease in Cash Value and
any applicable surrender charge will be allocated among the Divisions of the
Separate Account and the General Account in the same proportion that the
Policy's Cash Value in each Division and the General Account bears to the
total Cash Value of the Policy, less the Cash Value in the Loan Account, on
the date the request for pro rata surrender is received.
A pro rata surrender can not be processed if it will reduce the Face Amount
below the minimum Face Amount of the Policy. No pro rata surrender will be
processed for more Cash Surrender Value than is available on the date of the
pro rata surrender. A cash payment will be made to the Owner for the amount
of Cash Value reduction less any applicable surrender charges.
Pro rata surrenders may affect the way in which the cost of insurance charge
is calculated and the amount of the pure insurance protection afforded under
the Policy. (See Monthly Deduction - Cost of Insurance.)
CHARGES ON SURRENDER, PARTIAL WITHDRAWALS AND PRO RATA SURRENDER. If a
Policy is surrendered within the first ten Policy Years, the Deferred
Contingent Sales Charge will apply. (See Contingent Deferred Sales Charge.)
A partial withdrawal or pro rata surrender may also result in a charge. The
amount of the charge assessed is a portion of the Contingent Deferred Sales
Charge that would be deducted upon surrender or lapse. Charges are described
in more detail under Charges and Deductions - Contingent Deferred Sales
Charge.
While partial withdrawals and pro rata surrenders are each methods of
reducing a Policy's Cash Value, a pro rata surrender differs from a partial
withdrawal in that a partial withdrawal does not typically have a
proportionate effect on a Policy's death benefit by reducing the Policy's
Face Amount, while a pro rata surrender does. Assuming that a Policy's death
15
<PAGE> 21
benefit is not a percentage of the Policy's Cash Value, a pro rata surrender
will reduce the Policy's death benefit in the same proportion that the
Policy's Cash Value is reduced, while a partial withdrawal will reduce the
death benefit by one dollar for each dollar of Cash Value withdrawn. Partial
Withdrawals and Pro Rata Surrenders will also result in there being different
cost of insurance charges subsequently deducted. (See Monthly Deduction -
Cost of Insurance; Surrender, Partial Withdrawals and Pro Rata Surrender -
Partial Withdrawals; and Surrenders, Partial Withdrawals, and Pro Rata
Surrenders-Pro Rata Surrender.)
TRANSFERS
Under General American's current practices, a Policy's Cash Value, except
amounts credited to the Loan Account, may be transferred among the Divisions
of the Separate Account and for certain contracts, between the General
Account and the Divisions. Transfers to and from the General Account are
subject to restrictions (See The General Account). Requests for transfers
from or among Divisions of the Separate Account may be made in writing or by
telephone. Transfers from or among the Divisions of the Separate Account
must be in amounts of at least $500 or, if smaller, the Policy's Cash Value
in a Division. The first twelve requested transfers per policy year will be
allowed free of charge. Thereafter, the Company may impose a transfer charge
as provided in the policy. General American ordinarily will make transfers
and determine all values in connection with transfers as of the end of the
Valuation Period during which the transfer request is received.
All requests received on the same Valuation Day will be considered a single
transfer request. Each transfer must meet the minimum requirement of $500 or
the entire Cash Value in a Division, whichever is smaller. Where a single
transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will make
those transfers that do meet the requirements. Transfers resulting from
Policy Loans will not be counted for purposes of the limitations on the
amount or frequency of transfers allowed in each Policy Month or Policy Year.
Although General American currently intends to continue to permit transfers
for the foreseeable future, the Policy provides that General American may at
any time revoke, modify, or limit the transfer privilege, including the
minimum amount transferable, the maximum General Account allocation percent,
and the frequency of such transfers.
PORTFOLIO REBALANCING
Over time, the funds in the General Account and the Divisions of the Separate
Account will accumulate at different rates as a result of different
investment returns. The Owner may direct that from time to time we
automatically restore the balance of the Cash Value in the General Account
and in the Divisions of the Separate Account to the percentages determined in
advance. There are two methods of rebalancing available - periodic and
variance.
PERIODIC REBALANCING. Under this option the Owner elects a frequency
(monthly, quarterly, semiannually or annually), measured from the Policy
Anniversary. On each date elected, we will rebalance the funds by generating
transfers to reallocate the funds according to the investment percentages
elected.
VARIANCE REBALANCING. Under this option the Owner elects a specific
allocation percentage for the General Account and each Division of the
Separate Account. For each such account, the allocation percentage (if not
zero) must be a whole percentage and must not be less than five percent (5%).
The Owner also elects a maximum variance percentage (5%, 10%, 15%, or 20%
only), and can exclude specific funds from being rebalanced. On each Monthly
Anniversary we will review the current fund balances to determine whether any
fund balance is outside of the variance range (either above or below) as a
percentage of the specified allocation percentage for that fund. If any fund
is outside of the variance range, we will generate transfers to rebalance all
of the specified funds back to the predetermined percentages.
Transfers resulting from portfolio rebalancing will not be counted against
the total number of transfers allowed in a Policy Year before a charge is
applied.
The Owner may elect either form of portfolio rebalancing by specifying it on
the policy application, or may elect it later for an in-force Policy, or may
cancel it, by submitting a change form acceptable to General American under
its administrative rules.
Only one form of portfolio rebalancing may be elected at any one time, and
portfolio rebalancing may not be used in conjunction with dollar cost
averaging (see below).
General American reserves the right to suspend portfolio rebalancing at any
time on any class of Policies on a nondiscriminatory basis, or to charge an
administrative fee for election changes in excess of a specified number in a
Policy Year in accordance with its administrative rules.
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<PAGE> 22
DOLLAR COST AVERAGING
The Owner may direct the Company to transfer amounts on a monthly basis from
the Money Market Fund to any other Division of the Separate Account. This
service is intended to allow the Owner to utilize "dollar cost averaging"
("DCA"), a long-term investment technique which provides for regular, level
investments over time. The Company makes no guarantee that DCA will result
in a profit or protect against loss.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in
order to begin DCA transfers.
(3) In the written election of the DCA service, the Owner indicates how
DCA transfers are to be allocated among the Divisions of the Separate
Account. For any Division chosen to receive DCA transfers, the minimum
percentage that may be allocated to a Division is 5% of the DCA transfer
amount, and fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and DCA
transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal transfer
restrictions. (See Policy Rights -- Transfers.)
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums. (See
Payment and Allocation of Premiums -- Allocation of Net Premiums and Cash
Values.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is
completely depleted or the Owner instructs the Company in writing to
cancel the DCA service.
(8) Transfers as a result of a Policy Loan or repayment, or in exercise
of the conversion privilege, are not subject to the DCA rules and
restrictions. The DCA service terminates at the time the conversion
privilege is exercised, when any outstanding amount in any Division of the
Separate Account is immediately transferred to the General Account. (See
Policy Rights - Loans, and Policy Rights - Conversion Privilege.)
(9) DCA transfers will not be made until the Right to Examine Policy
period has expired (See Policy Rights - Right to Examine Policy).
The Company reserves the right to assess a processing fee for the DCA
service. The Company reserves the right to discontinue offering DCA upon 30
days' written notice to Owners. However, any such discontinuation will not
affect DCA services already commenced. The Company reserves the right to
impose a minimum total Cash Value, less outstanding Indebtedness, in order to
qualify for DCA service. Also, the Company reserves the right to change the
minimum necessary Cash Value and the minimum required DCA transfer amount.
RIGHT TO EXAMINE POLICY
The Owner may cancel a Policy within 20 days after receiving it (30 days if
the Owner is a resident of California and is age 60 or older) or within 45
days after the application was signed, whichever is later. If a Policy is
canceled within this time period, a refund will be paid. Where required by
state law, the refund will equal all premiums paid under the Policy. Where
required by state law, General American will refund an amount equal to the
greater of premiums paid or (1) plus (2) where (1) is the difference between
the premiums paid, including any policy fees or other charges, and the
amounts allocated to the Separate Account under the Policy and (2) is the
value of the amounts allocated to the Separate Account under the Policy on
the date the returned Policy is received by General American or its agent.
To cancel the Policy, the Owner should mail or deliver the Policy to either
General American or the agent who sold it. A refund of premiums paid by
check may be delayed until the Owner's check has cleared the bank upon which
it was drawn. (See General Matters - Postponement of Payments from the
Separate Account.)
DEATH BENEFIT AT ATTAINED AGE 100
If the Last Insured is living and the Policy is in force when the younger
Insured reaches Attained Age 100, the death benefit will be equal to 101% of
the Cash Value of the Policy unless the Lifetime Coverage Rider is in effect.
(See Additional Insurance Benefits.) At that point, no further premium
payments will be required or accepted, and no further monthly deductions will
be taken to cover the cost of insurance.
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<PAGE> 23
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application and
submit it to an authorized registered agent of General American or to General
American's Home Office. A Policy will generally be issued to Insureds of
Issue Ages 0 through 90 for regularly underwritten contracts, and to Insureds
of Issue Ages 20 through 70 for Policies issued in qualified pension plans.
General American may, in its sole discretion, issue Policies to individuals
falling outside of those Issue Ages. Acceptance of an application is subject
to General American's underwriting rules and General American reserves the
right to reject an application for any reason.
The Issue Date is determined by General American in accordance with its
standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and
Policy Months. Insurance coverages under a Policy will not take effect until
the Policy has been delivered and the initial premium has been paid during
the lifetimes of both Insureds and prior to any change in health as shown in
the application.
PREMIUMS
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium
for a Policy be at least equal to one-twelfth (1/12) of the Minimum Premium
for the Policy. The Minimum Premium is the amount specified for each Policy
based on the requested initial Face Amount and the charges under the Policy
which vary according to the Issue Age, sex, underwriting risk class, and
smoker status of the Insured. (See Charges and Deductions.) For policies
issued as a result of a term conversion from certain General American term
policies, the Company requires the Owner to pay an initial premium, which
combined with conversion credits given, if any, will equal one full "Minimum
Premium" for the Policy.
Following the initial premium, subject to the limitations described below,
premiums may be paid in any amount and at any interval. Premiums after the
first premium payment must be paid to General American at its Home Office.
An Owner may establish a schedule of planned premiums which will be billed by
the Company at regular intervals. Failure to pay planned premiums, however,
will not itself cause the Policy to lapse. (See Policy Lapse and
Reinstatement.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any amount, or
skip planned premium payments, subject to the minimum and maximum premium
limitations described below.
If a Policy is in the intended Owner's possession but the initial premium has
not been paid, the Policy is not in force. The intended Owner is deemed to
have the Policy for inspection only.
PREMIUM LIMITATIONS. Every premium payment must be at least $10. In no
event may the total of all premiums paid in any Policy Year exceed the
current maximum premium limitations for that Policy Year. Maximum premium
limits for the Policy Year will be shown in an Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death Benefit
Option B, the maximum premium limit for a Policy Year is the largest amount
of premium that can be paid in that Policy Year such that the sum of the
premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. For policies issued with Death Benefit Option C, the company
reserves the right to impose other restrictions upon the amount of premium
that may be paid into the Policy. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium
limitations, the Company will only accept that portion of the premium which
will make total premiums equal the maximum. Any part of the premium in
excess of that amount will be returned or applied as otherwise agreed, and no
further premiums will be accepted until allowed under the current maximum
premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy To detect whether the "seven
pay limit" has been exceeded. If the seven pay limit is exceeded, the Policy
becomes a "Modified Endowment". The Company has adopted administrative steps
designed to notify an Owner when it is believed that a premium payment will
cause a Policy to become a modified endowment contract. The Owner will be
given a limited amount of time to request that the premium be reversed in
order to avoid the Policy's being classified as a modified endowment
contract. (See Federal Tax Matters.)
If the Company receives a premium payment which would cause the death benefit
to increase by an
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<PAGE> 24
amount that exceeds the Net Premium portion of the payment, then the Company
reserves the right to (1) refuse that premium payment, or (2) require additional
evidence of insurability before it accepts the premium.
ALLOCATION OF NET PREMIUMS AND CASH VALUE
ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Owner
indicates how Net Premiums are to be allocated among the Divisions of the
Separate Account, to the General Account (if available), or both. For each
Division chosen, the minimum percentage that may be allocated to a Division
is 5% of the Net Premium, and fractional percentages may not be used.
Certain other restrictions apply to allocations made to the General Account
(see General Account). For policies issued with an allowable percentage to
the General Account of more than 5%, the minimum percentage is 5%, and
fractional percentages may not be used.
The allocation for future Net Premiums may be changed without charge at any
time by providing notice to the Company. Any change in allocation will take
effect immediately upon receipt by the Company of written notice. No charge
is imposed for changing the allocations of future premiums. The initial
allocation will be shown on the application which is attached to the Policy.
The Company may at any time modify the maximum percentage of future Net
Premiums that may be allocated to the General Account.
During the period from the Issue Date to the end of the Right to Examine
Policy Period (See Policy Rights - Right to Examine Policy), Net Premiums
will automatically be allocated to the Division that invests in the Money
Market Fund of Capital Company. When this period expires, the Policy's Cash
Value in that Division will be transferred to the Divisions of the Separate
Account and to the General Account (if available) in accordance with the
allocation requested in the application for the Policy, or any allocation
instructions received subsequent to receipt of the application. Net Premiums
received after the Right to Examine Policy Period will be allocated according
to the allocation instructions most recently received by the Company unless
otherwise instructed for that particular premium receipt.
The Policy's Cash Value may also be transferred between Divisions of the
Separate Account, and, if the General Account is available under the Policy,
between those Divisions and the General Account. (See Policy Rights -
Transfers.)
The value of amounts allocated to Divisions of the Separate Account will vary
with the investment performance of the chosen Divisions and the Owner bears
the entire investment risk. This will affect the Policy's Cash Value, and
may affect the death benefit as well. Owners should periodically review
their allocations of Net Premiums and the Policy's Cash Value in light of
market conditions and their overall financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike conventional whole life insurance policies, the failure to
make a premium payment following the initial premium will not itself cause a
Policy to lapse. If, during the first five Policy Years, the sum of all
premiums paid on the Policy, reduced by any partial withdrawals and any
outstanding loan balance, is greater than or equal to the sum of the No Lapse
Monthly Premiums for the elapsed months since the Issue Date, the Policy will
not lapse as a result of a Cash Value less any loans, loans interest due, and
any surrender charge being insufficient to pay the monthly deduction. Lapse
will occur (except as described above) when the Cash Surrender Value is
insufficient to cover the monthly deduction, and a grace period expires
without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary on
which the Cash Surrender Value becomes insufficient to meet the next monthly
deduction. The Company will notify the Owner at the beginning of the grace
period by mail addressed to the last known address on file with the Company.
The notice to the Owner will indicate the amount of additional premium that
must be paid. The amount of the premium required to keep the Policy in force
will be the amount to cover the outstanding monthly deductions and premium
expense charges. (See Charges and Deductions - Monthly Deduction.) If the
Company does not receive the required amount within the grace period, the
Policy will lapse and terminate without Cash Value.
If the Last Insured dies during the grace period, any overdue monthly
deductions will be deducted from the death benefit otherwise payable.
REINSTATEMENT. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
younger Insured's Attained Age 100. Reinstatement is subject to the
following conditions:
1. Evidence of the insurability of the Insureds (or if one of the Insureds
was deceased when the Policy lapsed, evidence of the insurability of the
surviving Insured) satisfactory to the Company (including evidence of
insurability of any person covered by a rider to reinstate the rider).
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<PAGE> 25
2. Payment of a premium that, after the deduction of premium expense
charges, is large enough to cover: (a) the monthly deductions due at the
time of lapse, and (b) two times the monthly deduction due at the time of
reinstatement.
3. Payment or reinstatement of any Indebtedness. Any Indebtedness
reinstated will cause Cash Value of an equal amount also to be reinstated.
Any loan interest due and unpaid on the Policy Anniversary prior to
reinstatement must be repaid at the time of reinstatement. Any loan paid
at the time of reinstatement will cause an increase in Cash Value equal to
the amount to be reinstated.
The Policy cannot be reinstated if it has been surrendered.
The amount of Cash Value on the date of reinstatement will be equal to the
amount of any Policy Loan reinstated, increased by the Net Premiums paid at
reinstatement, any Policy Loan paid at the time of reinstatement, and the
amount of any surrender charge paid at the time of lapse.
If both Insureds were alive on the date the Policy lapsed, then both Insureds
must be alive on the date the Company approves the application for
reinstatement. If only one Insured was alive on the date the Policy lapsed,
then that Insured must be alive on the date the Company approves the request
for reinstatement. If any Insured who was alive on the date the Policy lapsed
is not then alive when the Company approves the request for reinstatement, such
approval is void and of no effect.
The effective date of reinstatement will be the date the Company approves the
application for reinstatement. There will be a full monthly deduction for
the Policy Month which includes that date. (See Charges and
Deductions-Monthly Deduction.)
The surrender charge in effect at the time of reinstatement will equal the
surrender charge in effect at the time of lapse.
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate the
Company for providing the insurance benefits set forth in the Policy and any
additional benefits added by rider, administering the Policies, incurring
expenses in distributing the Policies, and assuming certain risks in
connection with the Policy.
PREMIUM EXPENSE CHARGES
Prior to allocation of Net Premiums, premium payments will be reduced by
premium expense charges consisting of a sales charge and a charge for premium
taxes. The premium payment less the premium expense charge equals the Net
Premium.
SALES CHARGE. A sales charge will be deducted from each premium payment to
partially compensate the Company for expenses incurred in distributing the
Policy and any additional benefits provided by riders. The Company currently
intends to deduct a sales charge determined according to the following
schedule:
Policy Year 1 15% of premium up to Target
5% of premium above Target
Policy Years 2-10 5% of all premium paid
Policy Years 11+ 2% of all premium paid
For policies issued in the state of Oregon, the amounts shown above are
increased by 2%.
The expenses covered by the sales charge include agent sales commissions, the
cost of printing Prospectuses and sales literature, and any advertising
costs. Where Policies are issued to Insureds with higher mortality risks or
to Insureds who have selected additional insurance benefits, a portion of the
amount deducted for sales charge is used to pay distribution expenses and
other costs associated with these additional coverages. No increase in this
sales charge will occur that would result in an increase in the sales charge
percentage deducted in any previous Policy year.
A Contingent Deferred Sales Charge is also imposed under certain
circumstances for expenses incurred in distributing the Policies. That
charge is discussed below.
To the extent that sales expenses are not recovered from the sales charge and
the surrender charge, those expenses may be recovered from other sources,
including the mortality and expense risk charge described below.
PREMIUM TAXES. Various states or other governing jurisdictions and their
subdivisions impose a tax on premiums received by insurance companies.
Premium taxes vary by jurisdiction. A deduction equal to the amount of the
actual premium tax (if any) is taken from each premium payment for these
taxes. The deduction allows the Company to pass through the amount of the
taxes imposed on the policy by the state or other governing jurisdiction and
any subdivisions thereof.
FEDERAL TAX CHARGE. This charge is designed to pass through the equivalent
of the federal tax applicable to the policy. The charge is currently 1.3% of
premium
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<PAGE> 26
paid, and is guaranteed not to increase except to the extent of any increases in
the federal tax.
MONTHLY DEDUCTION
Charges will be deducted monthly from the Cash Value of each Policy ("the
monthly deduction") to compensate the Company for (a) certain administrative
costs; (b) the cost of insurance; and (c) the cost of optional benefits added
by rider. The monthly deduction will be taken on the Investment Start Date
and on each Monthly Anniversary. It will be allocated among the General
Account and each Division of the Separate Account in the same proportion that
a Policy's Cash Value in the General Account and the Policy's Cash Value in
each Division bear to the total Cash Value of the Policy, less the Cash Value
in the Loan Account, on the date the deduction is taken. Because portions of
the monthly deduction, such as the cost of insurance, can vary from month to
month, the monthly deduction itself can vary in amount from month to month.
SELECTION AND ISSUE EXPENSE CHARGE. During the first ten Policy Years, the
Company assesses a monthly charge to cover the costs associated with the
underwriting and issue of the policy. The monthly charge per $1,000 of face
amount varies by Issue Age, risk class, and (except on unisex Policies) sex of
the Insureds.
MONTHLY ADMINISTRATIVE CHARGE. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection, record keeping, processing
death benefit claims, cash surrenders, partial withdrawals, Policy changes,
and reporting and overhead costs, processing applications, and establishing
Policy records. As reimbursement for administrative expenses related to the
maintenance of each Policy and the Separate Account, the Company assesses a
monthly administration charge from each Policy. This charge is currently $25
per month in the first Policy Year, and $6 per month for all Policy Years
thereafter, and is guaranteed not to increase while the Policy is in force.
The Company does not anticipate that it will make any profit on the monthly
administrative charge.
The Company may administer the Policy itself, or may purchase administrative
services from such sources (including affiliates) as may be available. Such
services will be acquired on a basis which, in the Company's sole discretion,
affords the best services at the lowest cost. The Company reserves the right
to select a company to provide services which the Company deems, in its sole
discretion, is the best able to perform such services in a satisfactory
manner even though the costs for such services may be higher than would
prevail elsewhere.
COST OF INSURANCE. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. The cost of insurance is
determined in a manner that reflects the anticipated mortality of both
Insureds and the fact that the death benefit is not payable until the death
of the Last Insured. Because the cost of insurance depends upon a number of
variables, the cost will vary for each Policy Month. The Company will determine
the cost of insurance charge by multiplying the applicable cost of insurance
rate or rates by the net amount at risk (defined below) for each Policy Month.
The cost of insurance rates are determined at the beginning of each Policy
Year. The rates will be based on the Attained Age, duration, rate class, and
(except for unisex Policies) sex of the Insureds at issue. (See Unisex
Requirements Under Montana Law.) The cost of insurance rates generally
increase as the Insureds' Attained Age increases.
The rate class of an Insured also will affect the cost of insurance rate.
For the initial Face Amount, the Company will use the rate class on the Issue
Date. If the death benefit equals a percentage of Cash Value, an increase in
Cash Value will cause an automatic increase in the death benefit. The rate
class for such increase will be the same as that used for the initial Face
Amount.
The Company currently places Insureds into a preferred rate class, a standard
rate class, or into rate classes involving a higher mortality risk.
Actual cost of insurance rates may change, and the actual monthly cost of
insurance rates will be determined by the Company based on its expectations
as to future mortality experience. However, the actual cost of insurance
rates will not be greater than the guaranteed cost of insurance rates set
forth in the Policy. For Policies which are not in a substandard risk class,
the guaranteed cost of insurance rates are equal to 100% of the rates set forth
in the male/female smoker/non-smoker 1980 CSO Mortality Tables (1980 CSO Tables
NA and SA and 1980 CSO Tables NG and SG for sex distinct Policies and Policies
issued in qualified pension plans; and 1980 CSO Tables NA and SA for unisex
policies issued in compliance with Montana law. All Policies are based on age
nearest birthday. Higher rates apply if either Insured is determined to be in
a substandard risk class.
In two otherwise identical Policies, an Insured in the preferred rate class
will have a lower cost of insurance than an Insured in a rate class involving
higher mortality risk. Each rate class is also divided
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<PAGE> 27
into two categories: smokers and nonsmokers. Nonsmoker Insureds will generally
incur a lower cost of insurance than similarly situated Insureds who smoke.
(Insureds under Attained Age 20 are automatically assigned to the non-smoker
rate class.)
The net amount at risk for a Policy Month is (a) the death benefit at the
beginning of the Policy Month divided by 1.0032737 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 4%), less
(b) the Cash Value at the beginning of the Policy Month. In calculating the
cost of insurance charges, the cost of insurance rate for a Face Amount is
applied to the net amount at risk for that Face Amount.
ADDITIONAL INSURANCE BENEFITS. The monthly deduction will include charges
for any additional benefits provided by rider. (See General Matters -
Additional Insurance Benefits.)
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
For a period of up to ten years after the Issue Date, the Company will impose a
CDSC upon surrender or lapse of the Policy, upon a partial withdrawal, or upon
a pro rata surrender. The amount of the charge assessed will depend upon a
number of factors, including the type of event (a full surrender, lapse, or
partial withdrawal), the amount of any premium payments made under the Policy
prior to the event, and the number of Policy Years having elapsed since the
Policy was issued.
The Contingent Deferred Sales Charge compensates the Company for expenses
relating to the distribution of the Policy, including agents' commissions,
advertising, and the printing of the Prospectus and sales literature.
CALCULATION OF CHARGE. If a Policy is surrendered, the charge will not
exceed the Contingent Deferred Sales Charge Percentage multiplied by the
annual Target Premium attributable to the base policy.
The Contingent Deferred Sales Charge Percentage is shown in the following
table.
<TABLE>
CONTINGENT DEFERRED SALES CHARGE
PERCENTAGE TABLE
<CAPTION>
IF SURRENDER OR LAPSE THE PERCENTAGE OF THE
OCCURS IN THE LAST MONTH ANNUAL TARGET
OF POLICY YEAR: PREMIUM PAYABLE IS:
<S> <C>
1 through 5 45%
6 40%
7 30%
8 20%
9 10%
10 and later 0%
</TABLE>
In addition, the percentages reduce equally for each Policy Month during the
years shown. For example, during the seventh year, the percentage reduces
equally each month from 40% at the end of the sixth Year to 30% at the end of
the seventh Year.
CHARGE ASSESSED UPON PARTIAL WITHDRAWALS OR PRO RATA SURRENDER. The amount
of the Contingent Deferred Sales Charge deducted upon a partial withdrawal or
pro rata surrender will equal a fraction of the charge that would be deducted
if the Policy were surrendered at that time. The fraction will be determined
by dividing the amount of the withdrawal of cash by the Cash Value before the
withdrawal and multiplying the result by the charge. Immediately after a
withdrawal, the Policy's remaining surrender charge will equal the amount of
the surrender charge immediately before the withdrawal less the amount
deducted in connection with the withdrawal.
ADJUSTMENT OF CHARGES. The Policy is available for purchase by individuals,
corporations, and other institutions. For certain individuals and certain
corporate or other group or sponsored arrangements purchasing one or more
Policies, General American may waive or adjust the amount of the Sales
Charge, Contingent Deferred Sales Charge, monthly administrative charge, or
other charges where the expenses associated with the sale of the Policy or
Policies or the underwriting or other administrative costs associated with
the Policy or Policies warrant an adjustment.
Sales, underwriting, or other administrative expenses may be reduced for
reasons such as expected economies resulting from a corporate purchase or a
group or sponsored arrangement; from the amount of the initial premium
payment or payments; or from the amount of projected premium payments.
General American will determine in its discretion if, and in what amount, an
adjustment is appropriate. The Company may modify its criteria for
qualification for adjustment of charges as experience is gained, subject to
the limitation that such adjustments will not be unfairly discriminatory
against the interests of any Owner.
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<PAGE> 28
SEPARATE ACCOUNT CHARGES
MORTALITY AND EXPENSE RISK CHARGE. General American will deduct a daily
charge from the Separate Account. The amount of the deduction is determined
as a percentage of the average net assets of each Division of the Separate
Account. The daily deduction percentages, and the equivalent effective
annual rate, are:
POLICY YEARS DAILY CHARGE ANNUAL
FACTOR EQUIVALENT
1-10 .0015027% 0.55%
11-20 .0012301% 0.45%
21+ .0009572% 0.35%
This deduction is guaranteed not to increase while the Policy is in force.
General American may realize a profit from this charge.
The mortality risk assumed by General American is that Insureds may die
sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense
risk assumed is that expenses incurred in issuing and administering the
Policy will exceed the amounts realized from the administrative charges
assessed against the Policy.
FUND EXPENSES. The value of the net assets of the Separate Account will
reflect the investment advisory fee and other expenses incurred by the
underlying investment companies. See the prospectuses for the respective
Funds for a description of investment advisory fees and other expenses.
No charges are currently made to the Separate Account for Federal, state, or
local taxes that the Company incurs which may be attributable to such
Separate Account or to the Policy. The Company may make such a charge for
any such taxes or economic burden resulting from the application of the tax
laws that it determines to be properly attributable to the Separate Account
or to the Policy. (See Federal Tax Matters.)
DIVIDENDS
The Policy is issued both as a participating Policy, which provides the Owner
an ownership interest in General American Mutual Holding Company, the parent
company of General American Life Insurance Company and as a non-participating
Policy, which provides no ownership interest in the Company. However, we do
not anticipate that the Policy will share in the divisible surplus of the
Company in the form of a dividend.
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the General
Account have not been registered under the Securities Act of 1933 and the
General Account has not been registered as an investment company under the
1940 Act. Accordingly, neither the General Account nor any interests therein
are subject to the provisions of these Acts and, as a result, the staff of
the SEC has not reviewed the disclosure in this Prospectus relating to the
General Account. The disclosure regarding the General Account may, however,
be subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
GENERAL DESCRIPTION
The General Account consists of all assets owned by General American other
than those in the Separate Account and other separate accounts. Subject to
applicable law, General American has sole discretion over the investment of
the assets of the General Account.
At issue, General American will determine the maximum percentage of the
non-borrowed Cash Value that may be allocated, either initially or by
transfer, to the General Account. The ability to allocate Net Premiums or to
transfer Cash Value to the General Account may not be made available, in the
Company's discretion, under certain Policies. Further, the option may be
limited with respect to some Policies. The Company may, from time to time,
adjust the extent to which premiums or Cash Value may be allocated to the
General Account (the "maximum allocation percentage"). Such adjustments may
not be uniform as to all Policies. General American may at any time modify
the General Account maximum allocation percent. Subject to this maximum, an
Owner may elect to allocate Net Premiums to the General Account, the Separate
Account, or both. Subject to this maximum, the Owner may also transfer Cash
Value from the Divisions of the Separate Account to the General Account, or
from the General Account to the Divisions of the Separate Account. The
allocation of Net Premiums or the transfer of Cash Value to the General
Account does not entitle an Owner to share in the investment experience of
the General Account. Instead, General American guarantees that Cash Value
allocated to the General Account will accrue interest at a rate of at least
4%, compounded annually, independent of the actual investment experience of
the General Account.
The Loan Account is part of the General Account.
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<PAGE> 29
THE POLICY
This Prospectus describes a flexible premium joint and last survivor variable
life insurance policy. This Prospectus is generally intended to serve as a
disclosure document only for the aspects of the Policy relating to the Separate
Account. For complete details regarding the General Account, see the Policy
itself.
GENERAL ACCOUNT BENEFITS
If the Owner allocates all Net Premiums only to the General Account and makes
no transfers, partial withdrawals, pro rata surrenders, or Policy Loans, the
entire investment risk will be borne by General American, and General
American guarantees that it will pay at least a minimum specified death
benefit. The Owner may select Death Benefit Option A, B or C under the
Policy and may change the Policy's Face Amount subject to satisfactory
evidence of insurability.
GENERAL ACCOUNT CASH VALUE
Net Premiums allocated to the General Account are credited to the Cash Value.
General American bears the full investment risk for these amounts and
guarantees that interest will be credited to each Owner's Cash Value in the
General Account at a rate of no less than 4% per year, compounded annually.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest, although it is not obligated to credit interest in excess of 4% per
year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH VALUE
IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 4% PER YEAR. If excess interest is credited, a
different rate of interest may be applied to the Cash Value in the Loan
Account. The Cash Value in the General Account will be calculated on each
Monthly Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash Value in
the General Account will be the amount of the Net Premiums allocated or Cash
Value transferred to the General Account, plus interest at the rate of 4% per
year, plus any excess interest which General American credits and any amounts
transferred into the General Account, less the sum of all Policy charges
allocable to the General Account and any amounts deducted from the General
Account in connection with partial withdrawals, pro rata surrenders,
surrender charges or transfers to the Separate Account.
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS
After the first Policy Year, a portion of Cash Value may be withdrawn from the
General Account or transferred from the General Account to the Separate
Account. A partial withdrawal, net of any applicable surrender charges, and any
transfer must be at least $500 or, the Policy's entire Cash Value in the
General Account if less than $500. No amount may be withdrawn from the General
Account that would result in there being insufficient Cash Value to meet any
surrender charges that would be payable immediately following the withdrawal
upon the surrender of the remaining Cash Value of the Policy. The total amount
of transfers and withdrawals in a Policy Year may not exceed a Maximum Amount
equal to the greater of (a) 25% of a Policy's Cash Surrender Value in the
General Account at the beginning of the Policy Year, (b) the previous Policy
Year's Maximum Amount (not to exceed the total Cash Surrender Value of the
Policy).
Transfers to the General Account are limited by the maximum allocation
percentage (described below) in effect for a Policy at the time a transfer
request is made.
Policy Loans may also be made from the Policy's Cash Value in the General
Account.
Loans and withdrawals from the General Account may have Federal income tax
consequences. (See Federal Tax Matters.)
There is no charge for the first twelve partial withdrawals or transfers in a
Policy Year. General American may impose a charge not to exceed the amount
specified in the Policy for each partial withdrawal or transfer in excess of
twelve in a Policy Year. General American may revoke or modify the privilege
of transferring amounts to or from the General Account at any time. Partial
withdrawals and pro rata surrenders will result in the imposition of the
applicable surrender charge.
Transfers, surrenders, partial withdrawals and pro rata surrenders payable
from the General Account and the payment of Policy Loans allocated to the
General Account may, subject to certain limitations, be delayed for up to six
months. However, if payment is deferred for 30 days or more, General
American will pay interest at the rate of 2.5% per year for the period of the
deferment. Amounts from the General Account used to pay premiums on policies
with General American will not be delayed.
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<PAGE> 30
GENERAL MATTERS
POSTPONEMENT OF PAYMENTS FROM THE SEPARATE ACCOUNT
The Company usually pays amounts payable on partial withdrawal, pro rata
surrender, surrender, or Policy Loan allocated to the Separate Account
Divisions within seven days after written notice is received. Payment of any
amount payable from the Divisions of the Separate Account upon surrender,
partial withdrawals, pro rata surrender, death of the Last Insured, or payments
of a Policy Loan and transfers, may be postponed whenever: (1) the New York
Stock Exchange is closed other than customary weekend and holiday closings, or
trading on the New York Stock Exchange is restricted as determined by the SEC;
(2) the SEC by order permits postponement for the protection of Owners; or (3)
an emergency exists, as determined by the SEC, as a result of which disposal of
securities is not reasonably practicable or it is not reasonably practicable to
determine the value of the Separate Account's net assets. The Company may
defer payment of the portion of any Policy Loan from the General Account for
not more than six months.
Payments under the Policy of any amounts derived from premiums paid by check
may be delayed until the Owner's check has cleared the bank upon which it
was drawn.
THE CONTRACT
The Policy, the attached application, any riders, endorsements, and any
application for reinstatement constitute the entire contract. All statements
made by the Insureds in the application and any supplemental applications can
be used to contest a claim or the validity of the Policy. Any change to the
Policy must be in writing and approved by the President, a Vice President, or
the Secretary of the Company. No agent has the authority to alter or modify
any of the terms, conditions, or agreements of the Policy or to waive any of
its provisions.
CONTROL OF POLICY
The Insureds jointly are the Owner of the Policy unless another person or
entity is shown as the Owner in the application. Ownership may be changed,
however, as described below. The Owner is entitled to all rights provided by
the Policy. Any person whose rights of ownership depend upon some future
event does not possess any present rights of ownership. If there is more
than one Owner at a given time, all Owners must exercise the rights of
ownership by joint action. If the Owner dies, and the Owner is not one or
both of the Insureds, the Owner's interest in the Policy becomes the property
of his or her estate unless otherwise provided. Unless otherwise provided,
the Policy is jointly owned by all Owners named in the Policy or by the
survivors of those joint Owners. Unless otherwise stated in the Policy, the
final Owner is the estate of the last joint Owner to die. The Company may
rely on the written request of any trustee of a trust which is the Owner of
the Policy, and the Company is not responsible for the proper administration
of any such trust.
BENEFICIARY
The Beneficiary(ies) is (are) the person(s) specified in the application or
by later designation. Unless otherwise stated in the Policy, the Beneficiary
has no rights in a Policy before the death of the Last Insured. If there is
more than one Beneficiary at the death of the Last Insured, each Beneficiary
will receive equal payments unless otherwise provided by the Owner. If no
Beneficiary is living at the death of the Last Insured, the proceeds will be
payable to the Owner or, if the Owner is not living, to the Owner's estate.
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
CHANGE OF OWNER OR BENEFICIARY
The Owner may change the ownership and/or Beneficiary designation by written
request in a form acceptable to the Company at any time during the Last
Insured's lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect
as of the date the request is signed, whether or not the Last Insured is
living when the request is received at the Company's Home Office. The
Company is not liable for any payment made or action taken before the
Company received the written request for change. If the Owner is also a
Beneficiary of the Policy at the time of the Last Insured's death, the Owner
may, within sixty days of the Last Insured's death, designate another person
to receive the Policy proceeds. Any change will be subject to any assignment
of the Policy or any other legal restrictions.
POLICY CHANGES
The Company reserves the right to limit the number of changes to a Policy to
one per Policy Year and to restrict changes in the first Policy Year.
Currently, only one change is permitted during any Policy Year and no change
may be made during the first Policy
25
<PAGE> 31
Year. For this purpose, changes include decreases in Face Amount and changes
in the death benefit option. No change will be permitted, if as a result, the
Policy would fail to satisfy the definition of life insurance in Section 7702
of the Internal Revenue Code or any applicable successor provision.
CONFORMITY WITH STATUTES
If any provision in a Policy is in conflict with the laws of the state
governing the Policy, the provision will be deemed to be amended to conform
to such laws. In addition, the Company reserves the right to change the
Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of any Federal or state statute,
rule, or regulation, including, but not limited to, requirements of the
Internal Revenue Code, or its regulations or published rulings.
CLAIMS OF CREDITORS
To the extent permitted by law, neither the Policy nor any payment under it
will be subject to the claims of creditors or to any legal process.
INCONTESTABILITY
The Policy is incontestable after it has been in force for two years from the
Issue Date during the lifetime of either Insured. An addition of a rider after
the Issue Date is incontestable after such addition has been in force for two
years from its effective date during the lifetime of either Insured. Any
reinstatement of a Policy is incontestable only after it has been in force
during the lifetime of either Insured for two years after the effective date of
the reinstatement.
ASSIGNMENT
The Company will be bound by an assignment of a Policy only if: (a) the
assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy proceeds is subject to the rights of any
assignee of record. If a claim is based on an assignment, the Company may
require proof of the interest of the claimant. A valid assignment will take
precedence over the claim of any Beneficiary.
SUICIDE
Suicide within two years of the Issue Date is not covered by the Policy. If
either Insured dies by suicide, while sane or insane, within two years
from the Issue Date (or within the maximum period permitted by the laws of
the state in which the Policy was delivered, if less than two years), the
amount payable will be limited to premiums paid, less any partial withdrawals
and outstanding Indebtedness subject to certain limitations.
If the either Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, unless that Insured
intended suicide when the Policy was applied for.
MISSTATEMENT OF AGE OR SEX AND CORRECTIONS
If the age or sex (except in unisex Policies, see Unisex Requirements Under
Montana Law) of the Insureds has been misstated in the application, the
amount of the death benefit will be that which the most recent cost of
insurance charge would have purchased for the correct age and sex.
Any payment or Policy changes made by the Company in good faith, relying on
its records or evidence supplied with respect to such payment, will fully
discharge the Company's duty. The Company reserves the right to correct any
errors in the Policy.
ADDITIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more of the following additional
insurance benefits may be added to a Policy by rider. The descriptions below
are intended to be general; the terms of the Policy riders providing the
additional benefits may vary from state to state, and the Policy should be
consulted. The cost of any additional insurance benefits which require
additional charges will be deducted as part of the monthly deduction from the
Policy's Cash Value. (See Charges and Deductions - Monthly Deduction.)
Certain restrictions may apply and are described in the applicable rider. An
insurance agent authorized to sell the Policy can describe these extra
benefits further. Samples of the provisions are available from General
American upon written request.
WAIVER OF SPECIFIED PREMIUM RIDER. Provides for crediting the Policy's Cash
Value with a specified monthly premium while the covered Insured is totally
disabled. The monthly premium selected at issue is not guaranteed to keep
the Policy in force. The covered Insured must have become disabled after age
5 and before age 65.
ADJUSTABLE BENEFIT TERM RIDER. This rider allows an employer who is the
Owner to provide adjustable term insurance without evidence of insurability
to comply with the terms of an associated employee benefit plan. The
increase in coverage occurs on each Policy Anniversary.
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<PAGE> 32
ANNIVERSARY PARTIAL WITHDRAWAL RIDER. This rider allows the owner to
withdraw up to 15% of the Policy's Cash Surrender Value on any Policy
Anniversary without reducing the Face Amount.
JOINT SUPPLEMENTAL COVERAGE TERM RIDER. This rider provides level term
insurance on the lives of the Insureds under the base policy. It can be
added only at issue. It cannot be increased or added to an existing Policy.
SECONDARY GUARANTEE RIDER. This rider guarantees that if, during the
secondary guarantee period, the sum of all premiums paid on the Policy,
reduced by any partial withdrawals and any outstanding loan balance, is
greater than or equal to the sum of the secondary guarantee premiums required
since the Issue Date, the Policy will not lapse as a result of a Cash Value
less any loans, loans interest due, and any surrender charge being
insufficient to pay the monthly deduction.
The secondary guarantee period is the number of Policy Years until the younger
Insured reaches Attained Age 100.
LIFETIME COVERAGE RIDER. This rider provides the continuation of the
Policy's face amount beyond the younger Insured's Attained Aage 100, provided
the policy remains in force to that date with a positive cash
surrender value. If the Policy is in force after the younger Insured's
Attained Age 100, the death benefit will be the greater of the face amount or
101% of the Cash Value.
DIVORCE SPLIT RIDER. This rider allows the Policy to be split into two
separate policies in the event of the divorce of a married couple who are the
Insureds under the Policy.
ESTATE PRESERVATION TERM RIDER. This rider provides joint level term
insurance, payable at the death of the Last Insured, for a period of four
years from the date of the rider.
RECORDS AND REPORTS
The Company will maintain all records relating to the Separate Account and
will mail to the Owner once each Policy Year, at the last known address of
record, a report which shows the current Policy values, premiums paid,
deductions made since the last report, and any outstanding Policy Loans. The
Owner will also be sent a periodic report for each Fund and a list of the
securities held in each Fund. Receipt of premium payments, transfers,
partial withdrawals, pro rata surrenders, Policy Loans, loan repayments,
changes in death benefit options, decreases in Face Amount, surrenders and
reinstatements will be confirmed promptly following each transaction.
An Owner may request in writing a projection of illustrated future Cash
Surrender Values and death benefits. This projection will be furnished by
the Company for a nominal fee which will not exceed $25.
DISTRIBUTION OF THE POLICIES
The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for the Company, are also registered representatives of
Walnut Street Securities, Inc. ("Walnut Street"), the principal underwriter
of the Policy, or of broker-dealers who have entered into written sales
agreements with Walnut Street. Walnut Street was incorporated under the laws
of Missouri in 1984 and is a wholly-owned subsidiary of General American
Holding Company, which is, in turn, a wholly-owned subsidiary of the
Company. Walnut Street is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. No director or officer of Walnut
Street owns any units in the Separate Account.
Writing agents will receive commissions based on a commission schedule and
rules. Currently, agent first-year commissions equal 50% of target premiums
and 2.25% of excess premium paid in Policy Year 1. In renewal years, the
agent commissions vary from 1.0% to 2.0% of premiums paid in Policy Years 2
and later, depending on the agent's contract type. An additional service
fee, determined as a percentage of the Policy's unloaned Cash Value, is also
paid. The percentage varies by Policy Year from 0% to 0.20% of average
monthly unloaned assets. Reductions may be possible under the circumstances
outlined in the section entitled Adjustment of Charges. General Agents
receive compensation which may be in part based on the level of agent
commissions in their agencies.
As principal underwriter for the Policies, Walnut Street receives commission
income. Walnut Street receives no administrative fees, management fees, or
other fee income from sales of the Policies.
The general agent commission schedules and rules differ for different types
of agency contracts.
General American may use other distribution channels to sell the
non-participating version of the Policy.
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<PAGE> 33
FEDERAL TAX MATTERS
INTRODUCTION
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all situations. This discussion is not intended as tax
advice. Counsel or other competent tax Advisors should be consulted for more
complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
TAX STATUS OF THE POLICY
Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code")
includes a definition of a life insurance contract for Federal tax purposes.
The Secretary of the Treasury (the "Treasury") issued proposed regulations
which specify what will be considered reasonable mortality charges under
Section 7702. Guidance as to how Section 7702 is to be applied is, however,
limited. If a Policy were determined not to be a life insurance contract for
purposes of Section 7702, such Policy would not provide most of the tax
advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium class or on
a guaranteed or simplified issue basis, while there is some uncertainty due
to the limited guidance under Section 7702, the Company believes that such a
Policy should meet the Section 7702 definition of a life insurance contract.
However, with respect to a Policy issued on a substandard basis (i.e., a
premium class involving higher than standard mortality risk), it is not clear
whether such a Policy would satisfy Section 7702, particularly if the Owner
pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company will take whatever steps are appropriate and necessary to attempt
to cause such a Policy to comply with Section 7702, including possibly
refunding any premiums paid that exceed the limitations allowable under
Section 7702 (together with interest or other earnings on any such premiums
refunded as required by law). For these reasons, the Company reserves the
right to modify the Policy as necessary to attempt to qualify it as a life
insurance contract under Section 7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account, intends
to comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-5, which affect how assets may be invested.
Although General American does not control the Funds, it has entered into
agreements, which require these investment companies to be operated in
compliance with the requirements prescribed by the Treasury.
The IRS has stated in published rulings that a variable contract owner will
be considered the owner of separate account assets, for federal income tax
purposes, if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets.
If that were to be determined to be the case, income and gains from the
separate account assets would be includible in the variable contract owner's
gross income. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause
the investor (i.e., the Owner), rather than the insurance company, to be
treated as the owner of the assets in the account." This announcement also
stated that guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular
subaccounts without being treated as owners of the underlying assets."
The ownership rights under the Policy are different in certain respects from
those described by the IRS in rulings in which it was determined that policy
owners were not owners of separate account assets. For example, the Owner
has additional flexibility in allocating Premium payments and Policy Values.
These differences could result in an Owner being treated as the owner of a
pro rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
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<PAGE> 34
1. TAX TREATMENT OF POLICY BENEFITS. In general, the Company believes that
the proceeds and Cash Value increases of a Policy should be treated in a
manner consistent with a fixed-benefit life insurance policy for Federal
income tax purposes. Thus, the death benefit under the Policy should be
excludable from the gross income of the Beneficiary under Section 101(a)(1)
of the Code, unless a transfer for value (generally a sale of the policy) has
occurred.
Many changes or transactions involving a Policy may have tax consequences,
depending on the circumstances. Such changes include, but are not limited
to, the exchange of the Policy, a change of the Policy's Face Amount, a
Policy Loan, an additional premium payment, a Policy lapse with an
outstanding Policy Loan, a partial withdrawal, or a surrender of the Policy.
In addition, Federal estate and state and local estate, inheritance, and
other tax consequences of ownership or receipt of Policy proceeds depend upon
the circumstances of each Owner or Beneficiary. A competent tax Advisor
should be consulted for further information.
A Policy may also be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The
tax consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you are
contemplating the use of a Policy in any arrangement the value of which
depends in part on its tax consequences, you should be sure to consult a
qualified tax advisor regarding the tax attributes of the particular
arrangement.
Generally, the Owner will not be deemed to be in constructive receipt of the
Policy's Cash Value, including increments thereof, under the Policy until
there is a distribution. The tax consequences of distributions from, and
Policy Loans taken from or secured by, a Policy depend upon whether the
Policy is classified as a "modified endowment contract". However, upon a
complete surrender or lapse of any Policy, if the amount received plus the
amount of outstanding Indebtedness exceeds the total investment in the Policy,
the excess will generally be treated as ordinary income subject to tax.
2. MODIFIED ENDOWMENT CONTRACTS. A policy may be treated as a modified
endowment contract depending upon the amount of premiums paid in relation to
the death benefit provided under such Policy. The premium limitation rules
for determining whether a Policy is a modified endowment contract are
extremely complex. In general, however, a Policy will be a modified
endowment contract if the accumulated premiums paid at any time during the
first seven Policy Years exceed the sum of the net level premiums which would
have been paid on or before such time if the Policy provided for paid-up
future benefits (based on the lowest level of benefits in effect for the
Policy) after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed" it may cause such Policy to
be treated as a modified endowment contract. The material change rules for
determining whether a Policy is a modified endowment contract are also
extremely complex. In general, however, the determination of whether a
Policy will be a modified endowment contract after a material change
generally depends upon the relationship among the death benefit at the time
of such change, the Cash Value at the time of the change and the additional
premiums paid in the seven Policy Years starting with the date on which the
material change occurs.
Moreover, a life insurance contract received in exchange for a life insurance
contract classified as a modified endowment contract will also be treated as
a modified endowment contract. A reduction in a Policy's benefits may also
cause such Policy to become a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a modified
endowment contract will depend upon the circumstances of each Policy. The
Company has, however, adopted administrative steps designed to protect an
Owner against the possibility that the Policy might become a modified
endowment contract. The Company believes the safeguards are adequate for
most situations, but it cannot provide complete assurance that a Policy will
not be classified as a modified endowment contract. At the time a premium is
credited which would cause the Policy to become a modified endowment
contract, the Company will notify the Owner that unless a refund of the
excess premium is requested by the Owner, the Policy will become a modified
endowment contract. The Owner will have 30 days after receiving such
notification to request the refund. The excess premium paid will be returned
to the Owner upon receipt by the Company of the refund request. The amount
to be refunded will be deducted from the Policy Cash Value in the Divisions
of the Separate Account and in the General Account in the same proportion as
the premium payment was allocated to such Divisions.
Accordingly, a prospective Owner should contact a competent tax advisor
before purchasing a Policy to determine the circumstances under which the
Policy would be a modified endowment contract. In addition, an Owner should
contact a competent tax Advisor before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or
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<PAGE> 35
change would cause the Policy (or the new Policy in the case of an exchange) to
be treated as a modified endowment contract.
3. DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED ENDOWMENT CONTRACT.
Policies classified as modified endowment contracts will be subject to the
following tax rules: First, all distributions, including distributions upon
surrender and benefits paid at maturity, from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess (if any)
of the Cash Value immediately before the distribution over the investment in
the Policy (described below) at such time. Second, Policy Loans taken from,
or secured by, such a Policy, as well as due but unpaid interest thereon, are
treated as distributions from such a Policy and taxed accordingly. Third, a
10 percent additional income tax is imposed on the portion of any
distribution from, or Policy Loan taken from or secured by, such a Policy
that (a) is included in income, except where the distribution or Policy Loan
is made on or after the Owner attains age 59 1/2, (b) is attributable to the
Owner's becoming disabled, or (c) is part of a series of substantially equal
periodic payments for the life (or life expectancy) of the Owner or the joint
lives (or joint life expectancies) of the Owner and the Owner's Beneficiary.
4. DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED ENDOWMENT CONTRACT.
Distributions from Policies not classified as a modified endowment contracts
are generally treated as first recovering the investment in the Policy
(described below) and then, only after the return of all such investment in
the Policy, as distributing taxable income. An exception to this general
rule occurs in the case of a decrease in the Policy's death benefit (possibly
including a partial withdrawal) or any other change that reduces benefits
under the Policy in the first 15 years after the Policy is issued and that
results in cash distribution to the Owner in order for the Policy to continue
complying with the Section 7702 definitional limits. Such a cash
distribution will be taxed in whole or in part as ordinary income (to the
extent of any gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified endowment
contract are not treated as distributions. Instead. such loans are treated
as indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, if the amount received plus the amount of indebtedness
exceeds the total investment in the Policy, the excess will generally be
treated as ordinary income subject to tax.
Neither distributions (including distributions upon surrender or lapse) nor
Policy Loans from, or secured by, a Policy that is not a modified endowment
contract are subject to the 10 percent additional income tax.
If a Policy which is not a modified endowment contract subsequently becomes a
modified endowment contract, then any distribution made from the Policy
within two years prior to the date of such change in status may become
taxable.
5. POLICY LOAN INTEREST. Generally, interest paid on any loan under a life
insurance Policy owned by an individual is not deductible. In addition,
interest on any loan under a life insurance Policy owned by a business
taxpayer on the life of any individual who is an officer of or is financially
interested in the business carried on by that taxpayer is deductible only
under certain very limited circumstances. AN OWNER SHOULD CONSULT A
COMPETENT TAX ADVISOR BEFORE DEDUCTING ANY LOAN INTEREST.
6. INTEREST EXPENSE ON UNRELATED INDEBTEDNESS. Under provisions added to the
Code in 1997 for policies issued after June 8, 1997, if a business taxpayer
owns or is the beneficiary of a Policy on the life of any individual who is
not an officer, director, employee, or 20 percent owner of the business, and
the taxpayer also has debt unrelated to the Policy, a portion of the
taxpayer's unrelated interest expense deductions may be lost. No business
taxpayer should purchase or, exchange a Policy on the life of any individual
who is not an officer, director, employee, or 20 percent owner of the business
without first consulting a competent tax Advisor.
7. INVESTMENT IN THE POLICY. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
8. MULTIPLE POLICIES. All modified endowment contracts that are issued by
the Company (or its affiliates) to the same Owner during any calendar year
are treated as one modified endowment contract for purposes of determining
the amount includible in gross income under Section 72(e) of the Code.
9. POSSIBLE CHARGE FOR TAXES. At the present time, the Company makes no
charge to the Separate
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<PAGE> 36
Account for any Federal, state, or local taxes (as opposed to Premium Tax
Charges which are deducted from premium payments) that it incurs which may be
attributable to such Separate Account or to the Policies. The Company, however,
reserves the right in the future to make a charge for any such tax or other
economic burden resulting from the application of the tax laws that it
determines to be properly attributable to the Separate Account or to the
Policies.
10. POSSIBLE CHANGES IN TAXATION. As of the date of this Prospectus, the
President's budget for fiscal year 1999 contains a number of proposals that
would adversely affect the Federal income tax treatment of life insurance
contracts. Of particular importance to owners of variable life insurance
contracts such as the Policy are two proposals under which, if adopted: (1)
the inside buildup of variable life insurance contracts like the Policy would
be taxed whenever cash values were reallocated among the available investment
options, for example, if the Periodic and Variance Rebalancing options
available under the Policy were used, and (2) it would no longer be possible
to exchange a variable life insurance contract tax free under Code section
1035. Moreover, it is always possible that any changes in the tax treatment
of life insurance contracts could be effective prior to the date of any new
legislation.
UNISEX REQUIREMENTS UNDER MONTANA LAW
The State of Montana generally prohibits the use of actuarial tables that
distinguish between men and women in determining premiums and Policy benefits
for policies issued on the lives of their residents. Therefore, all Policies
offered by this Prospectus to insure residents of Montana will have premiums
and benefits which are based on actuarial tables that do not differentiate on
the basis of sex.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a custodial
account in its name at the Bank of New York. The Company maintains records
of all purchases and redemptions of applicable Fund shares by each of the
Divisions. Additional protection for the assets of the Separate Account is
afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements, the
Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act
or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote shares of the Fund in its own right, it may
elect to do so. No voting privileges apply to the Policies with respect to
Cash Value removed from the Separate Account as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate Account
credited to the Owner at the record date, rather than the number of units
alone. Fractional shares will be counted. The number of votes of the Fund
which the Owner has the right to instruct will be determined as of the date
coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures
established by the mutual funds.
The company will vote shares of a Fund for which no timely instructions are
received in proportion to the voting instructions which are received with
respect to that Fund. The Company will also vote any shares of the Funds
which are not attributable to Policies in the same proportion.
Each person having a voting interest in a Division will receive any proxy
material, reports, and other materials relating to the appropriate Fund.
DISREGARD OF VOTING INSTRUCTIONS. The Company may, when required by state
insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment Advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes
initiated by an Owner in the investment policy or the investment Advisor or
sub-Advisor of a Fund if the Company reasonably disapproves of such changes.
A proposed change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities, or the
Company determined
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<PAGE> 37
that the change would have an adverse effect on its General Account in that the
proposed investment policy for a Fund may result in overly speculative or
unsound investments. If the Company disregards voting instructions, a summary
of that action and the reasons for such action will be included in the next
annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a stock life insurance company organized under the laws of
Missouri, and the Separate Account are subject to regulation by the Missouri
Department of Insurance. An annual statement is filed with the Director of
Insurance on or before March 1st of each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding year. Periodically, the Director of Insurance examines the
liabilities and reserves of the Company and the Separate Account and
certifies their adequacy, and a full examination of the Company's operations
is conducted by the National Association of Insurance Commissioners at least
once every three years.
In addition, the Company is subject to the insurance laws and regulations of
other states within which it is licensed or may become licensed to operate.
Generally, the insurance departments of other states apply the laws of the
state of domicile in determining permissible investments.
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<PAGE> 38
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
PRINCIPAL OFFICERS<F**>
- -----------------------
<S> <C>
Richard A. Liddy Chairman, President and CEO, 1/95-present; Chairman of the Executive Committee,
5/92-present. Formerly President and CEO, 5/92-1/95.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-Sales and Marketing, 10/96-present. Formerly Vice President-Group Field
Accounts, 4/87-10/96.
Kevin C. Eichner Executive Vice President of General American, Chairman of GenMark, Chairman of Walnut
Street Securities, 10/97-Present. President and CEO, Collaborative Strategies,
1983-Present.
E. Thomas Hughes Corporate Actuary and Treasurer, 10/94-present. Formerly Executive Vice
President-Group Pensions, 3/90-10/94
Michael P. Ingrassia Vice President-Group Executive Accounts, 3/92-present.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly Vice President and Chief
Actuary, American Bankers Insurance Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present. Formerly Managing
Director, William M. Mercer, Inc., 7/93-8/95; President and Chief Operating Officer,
W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of America, 12/92-present.
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
<F**> The principal business address of Messrs. Banstetter, Hughes, and Liddy is
General American Life Insurance Company, 700 Market Street, St. Louis,
Missouri 63101. The principal business address for Messrs. Barber,
Boudreaux, Ingrassia, Winer and Wolzenski and for Ms. Snyder is
13045 Tesson Ferry Road, St. Louis, Missouri 63128. The principal
business address for Mr. Woodring is 660 Mason Ridge Center Drive,
Suite 300, St. Louis, Missouri 63141. The principal business address
for Mr. Eichner is 670 Mason Ridge Center Drive, Suite 100, St. Louis,
Missouri 63141.
33
<PAGE> 39
<CAPTION>
NAME PRINCIPAL OCCUPATIONS(S)
---- DURING PAST FIVE YEARS<F*>
--------------------------
DIRECTORS
- ---------
<S> <C>
August A. Busch III Chairman of the Board and President, Anheuser-Busch
Anheuser-Busch Companies, Inc. Companies, Inc. (beer business).
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric
Union Electric Company Company (electric utility business).
P.O. Box 149
St. Louis, Missouri 63166
John C. Danforth Partner. Formerly, U. S. Senator, State of Missouri.
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Past President, Edison Brothers Stores, Inc. (retail specialty stores).
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing
1375 North Highway Drive research business).
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc.
Schnuck Markets, Inc. (retail supermarket chain).
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina
Ralston Purina Company Company (pet food, batteries, and bread business); Chairman
Checkerboard Square Ralcorp Holdings, Inc. (ready-to-eat cereal, baby food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car
Enterprise Rent-A-Car rental).
600 Corporate Park Drive
St. Louis, Missouri 63105
34
<PAGE> 40
<CAPTION>
NAME PRINCIPAL OCCUPATIONS(S)
---- DURING PAST FIVE YEARS<F*>
--------------------------
DIRECTORS (CONTINUED)
- ---------------------
<S> <C>
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments).
Edward Jones
12555 Manchester
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company
Monsanto Company (chemicals diversified industry, pharmaceuticals, life science
800 North Lindbergh products, and food ingredients business).
St. Louis, Missouri 63167
Ted C. Wetterau
Wetterau Associates, L.L.C. President, Wetterau Associates, L.L.C. Retired Chairman and Chief
7700 Bonhomme, Suite 750 Executive Officer, Wetterau Incorporated (retail and wholesale
St. Louis, Missouri 63105 grocery, manufacturing business).
<FN>
<F*>All positions listed are with General American unless otherwise indicated.
35
<PAGE> 41
LEGAL MATTERS
All matters of Missouri law pertaining to the Policy, including the validity
of the Policy and General American's right to issue the Policy under Missouri
insurance law, have been passed upon by Robert J. Banstetter, Vice
President, General Counsel, and Secretary of General American.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. General American is
not involved in any litigation that is of material importance in relation to
its total assets or that relates to the Separate Account.
EXPERTS
The audited financial statements of General American and the Separate Account
have been included in this Prospectus in reliance on the reports of KPMG Peat
Marwick LLP independent certified public accountants, and on the authority of
said firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the December 31, 1997 financial
statements of General American refers to the adoption of Statement of
Financial Accounting Standards No. 120, Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts.
Actuarial matters included in this Prospectus have been examined by Susan
Benjamin, FSA, MAAA, Senior Product Actuary of General American, as stated
in the opinion filed as an exhibit to the registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information
set forth in the registration statement and the amendments and exhibits to
the registration statement, to all of which reference is made for further
information concerning the Separate Account, General American and the Policy
offered hereby. Statements contained in this Prospectus as to the contents
of the Policy and other legal instruments are summaries. For a complete
statement of the terms thereof reference is made to such instruments as
filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in this
Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not
be considered as bearing on the investment performance of the assets held in
the Separate Account. Financial information is not provided for four of the
seventeen Divisions of the Separate Account because those Divisions have only
recently been established, and therefore no operating history exists for
those Divisions.
36
<PAGE> 42
APPENDIX A
Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Cash Value, Cash Surrender Value, and
death benefit of a Policy change with the investment experience of a Division
of the Separate Account. The tables show how the Cash Value, Cash Surrender
Value, and death benefit of a Policy issued to Insureds of a given age and at a
given premium would vary over time if the investment return on the assets held
in each Division of the Separate Account were a uniform, gross, after-tax
annual rate of 0%, 6%, or 12%. The tables illustrate a Policy issued in
Missouri to a Male and a Female Insured, for both ages 35 and 50, in a
preferred nonsmoker rate class. If either Insured falls into a smoker rate
class, the Cash Values, Cash Surrender Values, and death benefits would be
lower than those shown in the tables. In addition, the Cash Values, Cash
Surrender Values, and death benefits would be different from those shown if the
gross annual investment rates of return averaged 0%, 6%, and 12% over a period
of years, but fluctuated above and below those averages for individual Policy
Years.
The Cash Value column under the "Guaranteed" heading shows the accumulated
value of the Net Premiums paid at the stated interest rate, reflecting
deduction of the monthly administrative charges and monthly charges for the
cost of insurance based on the maximum values allowed under the non-smoker
version of the 1980 Commissioners Standard Ordinary Mortality Table. The
Cash Surrender Value column under the "Guaranteed" heading shows the
projected Cash Surrender Value of the Policy, which is calculated by taking
the Cash Value under the "Guaranteed" heading and deducting any appropriate
Contingent Deferred Sales Charge. The Cash value column under the "Current"
heading shows the accumulated value of the Net Premiums paid at the stated
interest rate, reflecting deduction of the monthly administrative charges and
monthly charges for the cost of insurance at their current level, which is
less than or equal to that allowed by the non-smoker 1980 Commissioners
Standard Ordinary Mortality Table. The Cash Value column under the "Current"
heading also reflects payment of the projected dividends into the Cash Value.
The Cash Surrender Value column under the "Current" heading shows the
projected Cash Surrender Value of the Policy, which is calculated by taking
the Cash Value under the "Current" heading and deducting any appropriate
Contingent Deferred Sales Charge. The illustrations of death benefits
reflect the above assumptions. The death benefits also vary between tables
depending upon whether Death Benefit Options A or C (Level Type) or Death
Benefit Option B (Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death benefit
reflect the fact that the investment rate of return is lower than the gross
after-tax return on the assets held in a Division of the Separate Account.
The charges include a charge for mortality and expense risk (equivalent to
.55% for Policy Years 1-10, .45% for Policy Years 11-20, and .35%
thereafter), and an assumed .78% charge for the investment Advisory fee and
administrative expenses combined. The actual investment Advisory fee
applicable to each Division is shown in the respective Prospectuses of each
Fund. After deduction for these amounts, the illustrated gross annual
investment rates of return of 0%, 6%, and 12% correspond to approximate
initial net annual rates of -1.33%, 4.67%, and 10.67%, respectively. The
Prospectuses for each Fund should be consulted for details about the nature
and extent of their expenses.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes against the Separate Account (as opposed to Premium
Charges which are deducted from premium payments), since General American is
not currently making any such charges. However, such charges may be made in
the future and, in that event, the gross annual investment rate of return of
the Divisions of the Separate Account would have to exceed 0%, 6%, and 12% by
an amount sufficient to cover the tax charges in order to produce the death
benefit and Cash Value illustration. (See Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon the
investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account, if no Policy Loans have been
made. The tables are also based on the assumptions that the Owner has not
requested a decrease in the Face Amount, that no partial withdrawals have been
made, that no transfer charges were incurred, and that no optional riders have
been requested.
Upon request, General American will provide a comparable illustration based
upon the proposed Insureds' age, sex, and rate class, the Face Amount or
premium requested, the proposed frequency of premium payments, and any
available riders requested.
37
<PAGE> 43
</TABLE>
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION A) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 0.00% (NET RATE OF -1.33%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 952 1,245 250,000 952 1,245 250,000
2 36 36 2,000 4,305 2,468 2,761 250.000 2,468 2,761 250,000
3 37 37 2,000 6,620 3,964 4,257 250,000 3,964 4,257 250,000
4 38 38 2,000 9,051 5,438 5,731 250,000 5,438 5,731 250,000
5 39 39 2,000 11,604 6,890 7,182 250,000 6,890 7,182 250,000
6 40 40 2,000 14,284 8,353 8,613 250.000 8,353 8,613 250,000
7 41 41 2,000 17,098 9,824 10,019 250,000 9,824 10,019 250,000
8 42 42 2,000 20,053 11,274 11,404 250,000 11,274 11,404 250,000
9 43 43 2,000 23,156 12,705 12,770 250,000 12,702 12,767 250,000
10 44 44 2,000 26,414 14,115 14,115 250,000 14,104 14,104 250,000
11 45 45 2,000 29,834 15,718 15,718 250,000 15,695 15,695 250,000
12 46 46 2,000 33,426 17,301 17,301 250,000 17,261 17,261 250,000
13 47 47 2,000 37,197 18,866 18,866 250,000 18,798 18,798 250,000
14 48 48 2,000 41,157 20,407 20,407 250,000 20,307 20,307 250,000
15 49 49 2,000 45,315 21,929 21,929 250,000 21,787 21,787 250,000
16 50 50 2,000 49,681 23,430 23,430 250,000 23,235 23,235 250,000
17 51 51 2,000 54,265 24,909 24,909 250,000 24,651 24,651 250,000
18 52 52 2,000 59,078 26,366 26,366 250,000 26,030 26,030 250,000
19 53 53 2,000 64,132 27,802 27,802 250,000 27,371 27,371 250,000
20 54 54 2,000 69,439 29,218 29,218 250,000 28,669 28,669 250,000
21 55 55 2,000 75,010 30,641 30,641 250,000 29,951 29,951 250,000
22 56 56 2,000 80,861 32,041 32,041 250,000 31,185 31,185 250,000
23 57 57 2,000 87,004 33,420 33,420 250,000 32,363 32,363 250,000
24 58 58 2,000 93,454 34,774 34,774 250,000 33,481 33,481 250,000
25 59 59 2,000 100,227 36,099 36,099 250,000 34,536 34,536 250,000
26 60 60 2,000 107,338 37,397 37,397 250,000 35,515 35,515 250,000
27 61 61 2,000 114,805 38,662 38,662 250,000 36,409 36,409 250,000
28 62 62 2,000 122,645 39,895 39,895 250,000 37,202 37,202 250,000
29 63 63 2,000 130,878 41,088 41,088 250,000 37,875 37,875 250,000
30 64 64 2,000 139,522 42,241 42,241 250,000 38,403 38,403 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
38
<PAGE> 44
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION A) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 6.00% (NET RATE OF 4.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 1,042 1,334 250,000 1,042 1,334 250,000
2 36 36 2,000 4,305 2,738 3,030 250.000 2,738 3,030 250,000
3 37 37 2,000 6,620 4,513 4,806 250,000 4,513 4,806 250,000
4 38 38 2,000 9,051 6,369 6,661 250,000 6,369 6,661 250,000
5 39 39 2,000 11,604 8,309 8,601 250,000 8,309 8,601 250,000
6 40 40 2,000 14,284 10,369 10,629 250.000 10,369 10,629 250,000
7 41 41 2,000 17,098 12,552 12,747 250,000 12,552 12,747 250,000
8 42 42 2,000 20,053 14,832 14,962 250,000 14,832 14,962 250,000
9 43 43 2,000 23,156 17,214 17,279 250,000 17,211 17,276 250,000
10 44 44 2,000 26,414 19,702 19,702 250,000 19,690 19,690 250,000
11 45 45 2,000 29,834 22,529 22,529 250,000 22,506 22,506 250,000
12 46 46 2,000 33,426 25,492 25,492 250,000 25,449 25,449 250,000
13 47 47 2,000 37,197 28,596 28,596 250,000 28,523 28,523 250,000
14 48 48 2,000 41,157 31,845 31,845 250,000 31,736 31,736 250,000
15 49 49 2,000 45,315 35,249 35,249 250,000 35,092 35,092 250,000
16 50 50 2,000 49,681 38,813 38,813 250,000 38,597 38,597 250,000
17 51 51 2,000 54,265 42,544 42,544 250,000 42,255 42,255 250,000
18 52 52 2,000 59,078 46,450 46,450 250,000 46,070 46,070 250,000
19 53 53 2,000 64,132 50,540 50,540 250,000 50,048 50,048 250,000
20 54 54 2,000 69,439 54,823 54,823 250,000 54,195 54,195 250,000
21 55 55 2,000 75,010 59,361 59,361 250,000 58,570 58,570 250,000
22 56 56 2,000 80,861 64,116 64,116 250,000 63,130 63,130 250,000
23 57 57 2,000 87,004 69,098 69,098 250,000 67,881 67,881 250,000
24 58 58 2,000 93,454 74,315 74,315 250,000 72,828 72,828 250,000
25 59 59 2,000 100,227 79,778 79,778 250,000 77,980 77,980 250,000
26 60 60 2,000 107,338 85,498 85,498 250,000 83,338 83,338 250,000
27 61 61 2,000 114,805 91,484 91,484 250,000 88,909 88,909 250,000
28 62 62 2,000 122,645 97,751 97,751 250,000 94,695 94,695 250,000
29 63 63 2,000 130,878 104,309 104,309 250,000 100,695 100,695 250,000
30 64 64 2,000 139,522 111,171 111,171 250,000 106,910 106,910 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
39
<PAGE> 45
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION A) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 12.00% (NET RATE OF 10.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 1,132 1,424 250,000 1,132 1,424 250,000
2 36 36 2,000 4,305 3,019 3,311 250.000 3,019 3,311 250,000
3 37 37 2,000 6,620 5,107 5,399 250,000 5,107 5,399 250,000
4 38 38 2,000 9,051 7,415 7,708 250,000 7,415 7,708 250,000
5 39 39 2,000 11,604 9,968 10,260 250,000 9,968 10,260 250,000
6 40 40 2,000 14,284 12,822 13,082 250.000 12,822 13,082 250,000
7 41 41 2,000 17,098 16,006 16,201 250,000 16,006 16,201 250,000
8 42 42 2,000 20,053 19,520 19,650 250,000 19,520 19,650 250,000
9 43 43 2,000 23,156 23,401 23,466 250,000 23,397 23,462 250,000
10 44 44 2,000 26,414 27,686 27,686 250,000 27,675 27,675 250,000
11 45 45 2,000 29,834 32,667 32,667 250,000 32,643 32,643 250,000
12 46 46 2,000 33,426 38,185 38,185 250,000 38,140 38,140 250,000
13 47 47 2,000 37,197 44,297 44,297 250,000 44,221 44,221 250,000
14 48 48 2,000 41,157 51,065 51,065 250,000 50,950 50,950 250,000
15 49 49 2,000 45,315 58,563 58,563 250,000 58,395 58,395 250,000
16 50 50 2,000 49,681 66,866 66,866 250,000 66,633 66,633 250,000
17 51 51 2,000 54,265 76,062 76,062 250,000 75,749 75,749 250,000
18 52 52 2,000 59,078 86,247 86,247 250,000 85,834 85,834 250,000
19 53 53 2,000 64,132 97,528 97,528 250,000 96,995 96,995 250,000
20 54 54 2,000 69,439 110,023 110,023 250,000 109,347 109,347 250,000
21 55 55 2,000 75,010 123,975 123,975 250,000 123,130 123,130 250,000
22 56 56 2,000 80,861 139,442 139,442 250,000 138,404 138,404 250,000
23 57 57 2,000 87,004 156,591 156,591 250,000 155,335 155,335 250,000
24 58 58 2,000 93,454 175,607 175,607 250,000 174,110 174,110 250,000
25 59 59 2,000 100,227 196,690 196,690 250,000 194,935 194,935 261,213
26 60 60 2,000 107,338 220,062 220,062 250,000 218,014 218,014 283,418
27 61 61 2,000 114,805 245,968 245,968 250,000 243,570 243,570 311,770
28 62 62 2,000 122,645 274,681 274,681 250,000 271,868 271,868 342,553
29 63 63 2,000 130,878 306,505 306,505 250,000 303,196 303,196 375,963
30 64 64 2,000 139,522 341,777 341,777 250,000 337,874 337,874 412,207
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
40
<PAGE> 46
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION B) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 0.00% (NET RATE OF -1.33%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 952 1,245 251,245 952 1,245 251,245
2 36 36 2,000 4,305 2,468 2,761 252,761 2,468 2,761 252,761
3 37 37 2,000 6,620 3,964 4,257 254,257 3,964 4,257 254,257
4 38 38 2,000 9,051 5,438 5,731 255,731 5,438 5,731 255,731
5 39 39 2,000 11,604 6,890 7,182 257,182 6,890 7,182 257,182
6 40 40 2,000 14,284 8,352 8,612 258,612 8,352 8,612 258,612
7 41 41 2,000 17,098 9,823 10,018 260,018 9,823 10,018 260,018
8 42 42 2,000 20,053 11,272 11,402 261,402 11,272 11,402 261,402
9 43 43 2,000 23,156 12,702 12,767 262,767 12,698 12,763 262,763
10 44 44 2,000 26,414 14,111 14,111 264,111 14,099 14,099 264,099
11 45 45 2,000 29,834 15,712 15,712 265,712 15,688 15,688 265,688
12 46 46 2,000 33,426 17,294 17,294 267,294 17,251 17,251 267,251
13 47 47 2,000 37,197 18,757 18,757 268,857 18,784 18,784 268,784
14 48 48 2,000 41,157 20,396 20,396 270,396 20,288 20,288 270,288
15 49 49 2,000 45,315 21,916 21,916 271,916 21,762 21,762 271,762
16 50 50 2,000 49,681 23,414 23,414 273,414 23,202 23,202 273,202
17 51 51 2,000 54,265 24,890 24,890 274,890 24,608 24,608 274,608
18 52 52 2,000 59,078 26,344 26,344 276,344 25,974 25,974 275,974
19 53 53 2,000 64,132 27,776 27,776 277,776 27,298 27,298 277,298
20 54 54 2,000 69,439 29,187 29,187 279,187 28,577 28,577 278,577
21 55 55 2,000 75,010 30,603 30,603 280,603 29,833 29,833 279,833
22 56 56 2,000 80,861 31,996 31,996 281,996 31,035 31,035 281,035
23 57 57 2,000 87,004 33,366 33,366 283,366 32,174 32,174 282,174
24 58 58 2,000 93,454 34,710 34,710 284,710 33,246 33,246 283,246
25 59 59 2,000 100,227 36,022 36,022 286,022 34,243 34,243 284,243
26 60 60 2,000 107,338 37,305 37,305 287,305 35,153 35,153 285,153
27 61 61 2,000 114,805 38,550 38,550 288,550 35,963 35,963 285,963
28 62 62 2,000 122,645 39,759 39,759 289,759 36,656 36,656 286,656
29 63 63 2,000 130,878 40,923 40,923 290,923 37,206 37,206 287,206
30 64 64 2,000 139,522 42,040 42,040 292,040 37,585 37,585 287,585
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
41
<PAGE> 47
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION B) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 6.00% (NET RATE OF 4.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 1,042 1,334 251,334 1,042 1,334 251,334
2 36 36 2,000 4,305 2,738 3,030 253,030 2,738 3,030 253,030
3 37 37 2,000 6,620 4,513 4,806 254,806 4,513 4,806 254,806
4 38 38 2,000 9,051 6,369 6,661 256,661 6,369 6,661 256,661
5 39 39 2,000 11,604 8,308 8,601 258,601 8,308 8,601 258,601
6 40 40 2,000 14,284 10,369 10,629 260,629 10,369 10,629 260,629
7 41 41 2,000 17,098 12,551 12,746 262,746 12,551 12,746 262,746
8 42 42 2,000 20,053 14,829 14,959 264,959 14,829 14,959 264,959
9 43 43 2,000 23,156 17,210 17,275 267,275 17,206 17,271 267,271
10 44 44 2,000 26,414 19,696 19,696 269,696 19,683 19,683 269,683
11 45 45 2,000 29,834 22,521 22,521 272,521 22,495 22,495 272,495
12 46 46 2,000 33,426 25,481 25,481 275,481 25,433 25,433 275,433
13 47 47 2,000 37,197 28,582 28,582 278,582 28,501 28,501 278,501
14 48 48 2,000 41,157 31,827 31,827 281,827 31,705 31,705 281,705
15 49 49 2,000 45,315 35,226 35,226 285,226 35,050 35,050 285,050
16 50 50 2,000 49,681 38,785 38,785 288,785 38,538 38,538 288,538
17 51 51 2,000 54,265 42,509 42,509 292,509 42,175 42,175 292,175
18 52 52 2,000 59,078 46,406 46,406 296,406 45,962 45,962 295,962
19 53 53 2,000 64,132 50,486 50,486 300,486 49,905 49,905 299,905
20 54 54 2,000 69,439 54,756 54,756 304,756 54,005 54,005 304,005
21 55 55 2,000 75,010 59,278 59,278 309,278 58,318 58,318 308,318
22 56 56 2,000 80,861 64,013 64,013 314,013 62,800 62,800 312,800
23 57 57 2,000 87,004 68,972 68,972 318,972 67,450 67,450 317,450
24 58 58 2,000 93,454 74,159 74,159 324,159 72,269 72,269 322,269
25 59 59 2,000 100,227 79,584 79,584 329,584 77,260 77,260 327,260
26 60 60 2,000 107,338 85,257 85,257 335,257 82,414 82,414 332,414
27 61 61 2,000 114,805 91,183 91,183 341,183 87,728 87,728 337,728
28 62 62 2,000 122,645 97,374 97,374 347,374 93,188 93,188 343,188
29 63 63 2,000 130,878 103,835 103,835 353,835 98,776 98,776 348,776
30 64 64 2,000 139,522 110,576 110,576 360,576 104,465 104,465 354,465
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
42
<PAGE> 48
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION B) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 12.00% (NET RATE OF 10.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 1,132 1,424 251,424 1,132 1,424 251,424
2 36 36 2,000 4,305 3,019 3,311 253,311 3,019 3,311 253,311
3 37 37 2,000 6,620 5,107 5,399 255,399 5,107 5,399 255,399
4 38 38 2,000 9,051 7,415 7,708 257,708 7,415 7,708 257,708
5 39 39 2,000 11,604 9,967 10,260 260,260 9,967 10,260 260,260
6 40 40 2,000 14,284 12,821 13,081 263,081 12,821 13,081 263,081
7 41 41 2,000 17,098 16,004 16,199 266,199 16,004 16,199 266,199
8 42 42 2,000 20,053 19,516 19,646 269,646 19,516 19,646 269,646
9 43 43 2,000 23,156 23,395 23,460 273,460 23,391 23,456 273,456
10 44 44 2,000 26,414 27,677 27,677 277,677 27,664 27,664 277,664
11 45 45 2,000 29,834 32,654 32,654 282,654 32,627 32,627 282,627
12 46 46 2,000 33,426 38,168 38,168 288,168 38,116 38,116 288,116
13 47 47 2,000 37,197 44,275 44,275 294,275 44,185 44,185 294,185
14 48 48 2,000 41,157 51,035 51,035 301,035 50,898 50,898 300,898
15 49 49 2,000 45,315 58,523 58,523 308,523 58,320 58,320 308,320
16 50 50 2,000 49,681 66,814 66,814 316,814 66,526 66,526 316,526
17 51 51 2,000 54,265 75,994 75,994 325,994 75,597 75,597 325,597
18 52 52 2,000 59,078 86,158 86,158 336,158 85,622 85,622 335,622
19 53 53 2,000 64,132 97,413 97,413 347,413 96,700 96,700 346,700
20 54 54 2,000 69,439 109,876 109,876 359,876 108,940 108,940 358,940
21 55 55 2,000 75,010 123,786 123,786 373,786 122,569 122,569 372,569
22 56 56 2,000 80,861 139,198 139,198 389,198 137,637 137,637 387,637
23 57 57 2,000 87,004 156,279 156,279 406,279 154,291 154,291 404,291
24 58 58 2,000 93,454 175,204 175,204 425,204 172,698 172,698 422,698
25 59 59 2,000 100,227 196,170 196,170 446,170 193,039 193,039 443,039
26 60 60 2,000 107,338 219,399 219,399 469,399 215,511 215,511 465,511
27 61 61 2,000 114,805 245,129 245,129 495,129 240,330 240,330 490,330
28 62 62 2,000 122,645 273,632 273,632 523,632 267,732 267,732 517,732
29 63 63 2,000 130,878 305,201 305,201 555,201 297,971 297,971 547,971
30 64 64 2,000 139,522 340,165 340,165 590,165 331,321 331,321 581,321
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
43
<PAGE> 49
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION C) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 0.00% (NET RATE OF -1.33%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 952 1,245 250,000 952 1,245 250,000
2 36 36 2,000 4,305 2,468 2,761 250,000 2,468 2,761 250,000
3 37 37 2,000 6,620 3,964 4,257 250,000 3,964 4,257 250,000
4 38 38 2,000 9,051 5,438 5,731 250,000 5,438 5,731 250,000
5 39 39 2,000 11,604 6,890 7,182 250,000 6,890 7,182 250,000
6 40 40 2,000 14,284 8,353 8,613 250,000 8,353 8,613 250,000
7 41 41 2,000 17,098 9,824 10,019 250,000 9,824 10,019 250,000
8 42 42 2,000 20,053 11,274 11,404 250,000 11,274 11,404 250,000
9 43 43 2,000 23,156 12,705 12,770 250,000 12,702 12,767 250,000
10 44 44 2,000 26,414 14,115 14,115 250,000 14,104 14,104 250,000
11 45 45 2,000 29,834 15,718 15,718 250,000 15,695 15,695 250,000
12 46 46 2,000 33,426 17,301 17,301 250,000 17,261 17,261 250,000
13 47 47 2,000 37,197 18,866 18,866 250,000 18,798 18,798 250,000
14 48 48 2,000 41,157 20,407 20,407 250,000 20,307 20,307 250,000
15 49 49 2,000 45,315 21,929 21,929 250,000 21,787 21,787 250,000
16 50 50 2,000 49,681 23,430 23,430 250,000 23,235 23,235 250,000
17 51 51 2,000 54,265 24,909 24,909 250,000 24,651 24,651 250,000
18 52 52 2,000 59,078 26,366 26,366 250,000 26,030 26,030 250,000
19 53 53 2,000 64,132 27,802 27,802 250,000 27,371 27,371 250,000
20 54 54 2,000 69,439 29,218 29,218 250,000 28,669 28,669 250,000
21 55 55 2,000 75,010 30,641 30,641 250,000 29,951 29,951 250,000
22 56 56 2,000 80,861 32,041 32,041 250,000 31,185 31,185 250,000
23 57 57 2,000 87,004 33,420 33,420 250,000 32,363 32,363 250,000
24 58 58 2,000 93,454 34,774 34,774 250,000 33,481 33,481 250,000
25 59 59 2,000 100,227 36,099 36,099 250,000 34,536 34,536 250,000
26 60 60 2,000 107,338 37,397 37,397 250,000 35,515 35,515 250,000
27 61 61 2,000 114,805 38,662 38,662 250,000 36,409 36,409 250,000
28 62 62 2,000 122,645 39,895 39,895 250,000 37,202 37,202 250,000
29 63 63 2,000 130,878 41,088 41,088 250,000 37,875 37,875 250,000
30 64 64 2,000 139,522 42,241 42,241 250,000 38,403 38,403 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
44
<PAGE> 50
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION C) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 6.00% (NET RATE OF 4.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 1,042 1,334 250,000 1,042 1,334 250,000
2 36 36 2,000 4,305 2,738 3,030 250,000 2,738 3,030 250,000
3 37 37 2,000 6,620 4,513 4,806 250,000 4,513 4,806 250,000
4 38 38 2,000 9,051 6,369 6,661 250,000 6,369 6,661 250,000
5 39 39 2,000 11,604 8,309 8,601 250,000 8,309 8,601 250,000
6 40 40 2,000 14,284 10,369 10,629 250,000 10,369 10,629 250,000
7 41 41 2,000 17,098 12,552 12,747 250,000 12,552 12,747 250,000
8 42 42 2,000 20,053 14,832 14,962 250,000 14,832 14,962 250,000
9 43 43 2,000 23,156 17,279 17,279 250,000 17,211 17,276 250,000
10 44 44 2,000 26,414 19,702 19,702 250,000 19,690 19,690 250,000
11 45 45 2,000 29,834 22,529 22,529 250,000 22,506 22,506 250,000
12 46 46 2,000 33,426 25,492 25,492 250,000 25,449 25,449 250,000
13 47 47 2,000 37,197 28,596 28,596 250,000 28,523 28,523 250,000
14 48 48 2,000 41,157 31,845 31,845 250,000 31,736 31,736 250,000
15 49 49 2,000 45,315 35,249 35,249 250,000 35,092 35,092 250,000
16 50 50 2,000 49,681 38,813 38,813 250,000 38,597 38,597 250,000
17 51 51 2,000 54,265 42,544 42,544 250,000 42,255 42,255 250,000
18 52 52 2,000 59,078 46,450 46,450 250,000 46,070 46,070 250,000
19 53 53 2,000 64,132 50,540 50,540 250,000 50,048 50,048 250,000
20 54 54 2,000 69,439 54,823 54,823 250,000 54,195 54,195 250,000
21 55 55 2,000 75,010 59,361 59,361 250,000 58,570 58,570 250,000
22 56 56 2,000 80,861 64,116 64,116 250,000 63,130 63,130 250,000
23 57 57 2,000 87,004 69,098 69,098 250,000 67,881 67,881 250,000
24 58 58 2,000 93,454 74,315 74,315 250,000 72,828 72,828 250,000
25 59 59 2,000 100,227 79,778 79,778 250,000 77,980 77,980 250,000
26 60 60 2,000 107,338 85,498 85,498 250,000 83,338 83,338 250,000
27 61 61 2,000 114,805 91,484 91,484 250,000 88,909 88,909 250,000
28 62 62 2,000 122,645 97,751 97,751 250,000 94,695 94,695 250,000
29 63 63 2,000 130,878 104,309 104,309 250,000 100,695 100,695 250,000
30 64 64 2,000 139,522 111,171 111,171 250,000 106,910 106,910 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
45
<PAGE> 51
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION C) FEMALE PREFERRED NONSMOKER AGE 35
ANNUAL PREMIUM = $2,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 12.00% (NET RATE OF 10.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 35 35 2,000 2,100 1,132 1,424 250,000 1,132 1,424 250,000
2 36 36 2,000 4,305 3,019 3,311 250,000 3,019 3,311 250,000
3 37 37 2,000 6,620 5,107 5,399 250,000 5,107 5,399 250,000
4 38 38 2,000 9,051 7,415 7,708 250,000 7,415 7,708 250,000
5 39 39 2,000 11,604 9,968 10,260 250,000 9,968 10,260 250,000
6 40 40 2,000 14,284 12,822 13,082 250,000 12,822 13,082 250,000
7 41 41 2,000 17,098 16,006 16,201 250,000 16,006 16,201 250,000
8 42 42 2,000 20,053 19,520 19,650 250,000 19,520 19,650 250,000
9 43 43 2,000 23,156 23,401 23,466 250,000 23,397 23,462 250,000
10 44 44 2,000 26,414 27,686 27,686 250,000 27,675 27,675 250,000
11 45 45 2,000 29,834 32,667 32,667 250,000 32,643 32,643 250,000
12 46 46 2,000 33,426 38,185 38,185 250,000 38,140 38,140 250,000
13 47 47 2,000 37,197 44,297 44,297 250,000 44,221 44,221 250,000
14 48 48 2,000 41,157 51,065 51,065 250,000 50,950 50,950 250,000
15 49 49 2,000 45,315 58,563 58,563 250,000 58,395 58,395 250,000
16 50 50 2,000 49,681 66,866 66,866 250,000 66,633 66,633 250,000
17 51 51 2,000 54,265 76,062 76,062 265,455 75,747 75,747 264,357
18 52 52 2,000 59,078 86,242 86,242 289,714 85,819 85,819 288,293
19 53 53 2,000 64,132 97,514 97,514 315,350 96,947 96,947 313,518
20 54 54 2,000 69,439 109,993 109,993 342,486 109,237 109,237 340,132
21 55 55 2,000 75,010 123,919 123,919 371,570 122,914 122,914 368,558
22 56 56 2,000 80,861 139,346 139,346 402,445 138,023 138,023 398,623
23 57 57 2,000 87,004 156,438 156,438 435,274 154,702 154,702 430,443
24 58 58 2,000 93,454 175,371 175,371 470,204 173,111 173,111 464,146
25 59 59 2,000 100,227 196,336 196,336 507,372 193,422 193,422 499,841
26 60 60 2,000 107,338 219,555 219,555 546,999 215,814 215,814 537,680
27 61 61 2,000 114,805 245,258 245,258 589,258 240,487 240,487 577,795
28 62 62 2,000 122,645 273,714 273,714 634,386 267,650 267,650 620,332
29 63 63 2,000 130,878 305,205 305,205 682,622 297,522 297,522 665,438
30 64 64 2,000 139,522 340,053 340,053 734,243 330,334 330,334 713,256
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
46
<PAGE> 52
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION A) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 0.00% (NET RATE OF -1.33%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,147 2,822 250,000 2,147 2,822 250,000
2 51 51 4,000 8,610 5,294 5,969 250.000 5,294 5,969 250,000
3 52 52 4,000 13,241 8,398 9,073 250,000 8,385 9,060 250,000
4 53 53 4,000 18,103 11,458 12,133 250,000 11,419 12,094 250,000
5 54 54 4,000 23,208 14,477 15,152 250,000 14,393 15,068 250,000
6 55 55 4,000 28,568 17,528 18,128 250.000 17,377 17,977 250,000
7 56 56 4,000 34,196 20,614 21,064 250,000 20,367 20,817 250,000
8 57 57 4,000 40,106 23,656 23,956 250,000 23,285 23,585 250,000
9 58 58 4,000 46,312 26,655 26,805 250,000 26,126 26,276 250,000
10 59 59 4,000 52,827 29,610 29,610 250,000 28,886 28,886 250,000
11 60 60 4,000 59,669 32,866 32,866 250,000 31,899 31,899 250,000
12 61 61 4,000 66,852 36,071 36,071 250,000 34,812 34,812 250,000
13 62 62 4,000 74,395 39,227 39,227 250,000 37,609 37,609 250,000
14 63 63 4,000 82,314 42,326 42,326 250,000 40,277 40,277 250,000
15 64 64 4,000 90,630 45,370 45,370 250,000 42,794 42,794 250,000
16 65 65 4,000 99,361 48,335 48,335 250,000 45,138 45,138 250,000
17 66 66 4,000 108,530 51,233 51,233 250,000 47,290 47,290 250,000
18 67 67 4,000 118,156 54,056 54,056 250,000 49,228 49,228 250,000
19 68 68 4,000 128,264 56,798 56,798 250,000 50,928 50,928 250,000
20 69 69 4,000 138,877 59,449 59,449 250,000 52,361 52,361 250,000
21 70 70 4,000 150,021 62,065 62,065 250,000 53,539 53,539 250,000
22 71 71 4,000 161,722 64,572 64,572 250,000 54,334 54,334 250,000
23 72 72 4,000 174,008 66,955 66,955 250,000 54,701 54,701 250,000
24 73 73 4,000 186,908 69,196 69,196 250,000 54,525 54,525 250,000
25 74 74 4,000 200,454 71,273 71,273 250,000 53,687 53,687 250,000
26 75 75 4,000 214,677 73,159 73,159 250,000 52,062 52,062 250,000
27 76 76 4,000 229,610 74,819 74,819 250,000 49,511 49,511 250,000
28 77 77 4,000 245,291 76,213 76,213 250,000 45,877 45,877 250,000
29 78 78 4,000 261,755 77,289 77,289 250,000 40,978 40,978 250,000
30 79 79 4,000 279,043 77,990 77,990 250,000 34,581 34,581 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
47
<PAGE> 53
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION A) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 6.00% (NET RATE OF 4.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,337 3,012 250,000 2,337 3,012 250,000
2 51 51 4,000 8,610 5,868 6,543 250.000 5,868 6,543 250,000
3 52 52 4,000 13,241 9,563 10,238 250,000 9,550 10,225 250,000
4 53 53 4,000 18,103 13,427 14,102 250,000 13,387 14,062 250,000
5 54 54 4,000 23,208 17,473 18,148 250,000 17,382 18,057 250,000
6 55 55 4,000 28,568 21,778 22,378 250.000 21,615 22,215 250,000
7 56 56 4,000 34,196 26,357 26,807 250,000 26,087 26,537 250,000
8 57 57 4,000 40,106 31,136 31,436 250,000 30,727 31,027 250,000
9 58 58 4,000 46,312 36,129 36,279 250,000 35,538 35,688 250,000
10 59 59 4,000 52,827 41,342 41,342 250,000 40,524 40,524 250,000
11 60 60 4,000 59,669 47,160 47,160 250,000 46,059 46,059 250,000
12 61 61 4,000 66,852 53,245 53,245 250,000 51,801 51,801 250,000
13 62 62 4,000 74,395 59,614 59,614 250,000 57,748 57,748 250,000
14 63 63 4,000 82,314 66,270 66,270 250,000 63,897 63,897 250,000
15 64 64 4,000 90,630 73,231 73,231 250,000 70,244 70,244 250,000
16 65 65 4,000 99,361 80,489 80,489 250,000 76,783 76,783 250,000
17 66 66 4,000 108,530 88,071 88,071 250,000 83,512 83,512 250,000
18 67 67 4,000 118,156 95,987 95,987 250,000 90,432 90,432 250,000
19 68 68 4,000 128,264 104,251 104,251 250,000 97,542 97,542 250,000
20 69 69 4,000 138,877 112,875 112,875 250,000 104,845 104,845 250,000
21 70 70 4,000 150,021 121,991 121,991 250,000 112,444 112,444 250,000
22 71 71 4,000 161,722 131,513 131,513 250,000 120,223 120,223 250,000
23 72 72 4,000 174,008 141,460 141,460 250,000 128,196 128,196 250,000
24 73 73 4,000 186,908 151,852 151,852 250,000 136,338 136,338 250,000
25 74 74 4,000 200,454 162,715 162,715 250,000 144,644 144,644 250,000
26 75 75 4,000 214,677 174,076 174,076 250,000 153,123 153,123 250,000
27 76 76 4,000 229,610 185,971 185,971 250,000 161,805 161,805 250,000
28 77 77 4,000 245,291 198,445 198,445 250,000 170,739 170,739 250,000
29 78 78 4,000 261,755 211,554 211,554 250,000 179,999 179,999 250,000
30 79 79 4,000 279,043 225,377 225,377 250,000 189,682 189,682 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
48
<PAGE> 54
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION A) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 12.00% (NET RATE OF 10.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,527 3,202 250,000 2,527 3,202 250,000
2 51 51 4,000 8,610 6,465 7,140 250.000 6,465 7,140 250,000
3 52 52 4,000 13,241 10,823 11,498 250,000 10,809 11,484 250,000
4 53 53 4,000 18,103 15,642 16,317 250,000 15,599 16,274 250,000
5 54 54 4,000 23,208 20,976 21,651 250,000 20,880 21,555 250,000
6 55 55 4,000 28,568 26,950 27,550 250.000 26,775 27,375 250,000
7 56 56 4,000 34,196 33,630 34,080 250,000 33,336 33,786 250,000
8 57 57 4,000 40,106 41,000 41,300 250,000 40,550 40,850 250,000
9 58 58 4,000 46,312 49,139 49,289 250,000 48,482 48,632 250,000
10 59 59 4,000 52,827 58,125 58,125 250,000 57,207 57,207 250,000
11 60 60 4,000 59,669 68,459 68,459 250,000 67,213 67,213 250,000
12 61 61 4,000 66,852 79,897 79,897 250,000 78,253 78,253 250,000
13 62 62 4,000 74,395 92,563 92,563 250,000 90,433 90,433 250,000
14 63 63 4,000 82,314 106,583 106,583 250,000 103,875 103,875 250,000
15 64 64 4,000 90,630 122,107 122,107 250,000 118,715 118,715 250,000
16 65 65 4,000 99,361 139,284 139,284 250,000 135,112 135,112 250,000
17 66 66 4,000 108,530 158,307 158,307 250,000 153,251 153,251 250,000
18 67 67 4,000 118,156 179,380 179,380 250,000 173,350 173,350 250,000
19 68 68 4,000 128,264 202,732 202,732 250,000 195,666 195,666 250,000
20 69 69 4,000 138,877 228,616 228,616 265,194 220,496 220,496 255,775
21 70 70 4,000 150,021 257,506 257,506 296,131 248,216 248,216 285,449
22 71 71 4,000 161,722 289,521 289,521 327,158 278,888 278,888 315,143
23 72 72 4,000 174,008 325,000 325,000 360,750 312,838 312,838 347,250
24 73 73 4,000 186,908 364,323 364,323 397,112 350,430 350,430 381,969
25 74 74 4,000 200,454 407,913 407,913 436,467 392,084 392,084 419,530
26 75 75 4,000 214,677 456,244 456,244 479,056 438,290 438,290 460,205
27 76 76 4,000 229,610 509,781 509,781 535,270 489,344 489,344 513,811
28 77 77 4,000 245,291 569,075 569,075 597,529 545,725 545,725 573,011
29 78 78 4,000 261,755 634,728 634,728 666,464 607,953 607,953 638,351
30 79 79 4,000 279,043 707,402 707,402 742,772 676,592 676,592 710,421
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
49
<PAGE> 55
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION B) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 0.00% (NET RATE OF -1.33%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,147 2,822 252,822 2,147 2,822 252,822
2 51 51 4,000 8,610 5,294 5,969 255,969 5,294 5,969 255,969
3 52 52 4,000 13,241 8,397 9,072 259,072 8,383 9,058 259,058
4 53 53 4,000 18,103 11,456 12,131 262,131 11,415 12,090 262,090
5 54 54 4,000 23,208 14,474 15,149 265,149 14,384 15,059 265,059
6 55 55 4,000 28,568 17,523 18,123 268,123 17,361 17,961 267,961
7 56 56 4,000 34,196 20,607 21,057 271,057 20,340 20,790 270,790
8 57 57 4,000 40,106 23,645 23,945 273,945 23,242 23,542 273,542
9 58 58 4,000 46,312 26,640 26,790 276,790 26,060 26,210 276,210
10 59 59 4,000 52,827 29,590 29,590 279,590 28,788 28,788 278,788
11 60 60 4,000 59,669 32,840 32,840 282,840 31,759 31,759 281,759
12 61 61 4,000 66,852 36,035 36,035 286,035 34,614 34,614 284,614
13 62 62 4,000 74,395 39,179 39,179 289,179 37,334 37,334 287,334
14 63 63 4,000 82,314 42,261 42,261 292,261 39,900 39,900 289,900
15 64 64 4,000 90,630 45,283 45,283 295,283 42,284 42,284 292,284
16 65 65 4,000 99,361 48,215 48,215 298,215 44,455 44,455 294,455
17 66 66 4,000 108,530 51,068 51,068 301,068 46,387 46,387 296,387
18 67 67 4,000 118,156 53,834 53,834 303,834 48,048 48,048 298,048
19 68 68 4,000 128,264 56,502 56,502 306,502 49,404 49,404 299,404
20 69 69 4,000 138,877 59,057 59,057 309,057 50,417 50,417 300,417
21 70 70 4,000 150,021 61,549 61,549 311,549 51,082 51,082 301,082
22 71 71 4,000 161,722 63,899 63,899 313,899 51,249 51,249 301,249
23 72 72 4,000 174,008 66,083 66,083 316,083 50,865 50,865 300,865
24 73 73 4,000 186,908 68,071 68,071 318,071 49,785 49,785 299,785
25 74 74 4,000 200,454 69,832 69,832 319,832 47,870 47,870 297,870
26 75 75 4,000 214,677 71,320 71,320 321,320 44,987 44,987 294,987
27 76 76 4,000 229,610 72,485 72,485 322,485 41,001 41,001 291,001
28 77 77 4,000 245,291 73,262 73,262 323,262 35,779 35,779 285,779
29 78 78 4,000 261,755 73,572 73,572 323,572 29,192 29,192 279,192
30 79 79 4,000 279,043 73,333 73,333 323,333 21,090 21,090 271,090
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
50
<PAGE> 56
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION B) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 6.00% (NET RATE OF 4.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,337 3,012 253,012 2,337 3,012 253,012
2 51 51 4,000 8,610 5,867 6,542 256,542 5,867 6,542 256,542
3 52 52 4,000 13,241 9,562 10,237 260,237 9,548 10,223 260,223
4 53 53 4,000 18,103 13,425 14,100 264,100 13,382 14,057 264,057
5 54 54 4,000 23,208 17,468 18,143 268,143 17,372 18,047 268,047
6 55 55 4,000 28,568 21,771 22,371 272,371 21,595 22,195 272,195
7 56 56 4,000 34,196 26,347 26,797 276,797 26,051 26,501 276,501
8 57 57 4,000 40,106 31,121 31,421 281,421 30,668 30,968 280,968
9 58 58 4,000 46,312 36,108 36,258 286,258 35,445 35,595 285,595
10 59 59 4,000 52,827 41,312 41,312 291,312 40,381 40,381 290,381
11 60 60 4,000 59,669 47,119 47,119 297,119 45,846 45,846 295,846
12 61 61 4,000 66,852 53,188 53,188 303,188 51,489 51,489 301,489
13 62 62 4,000 74,395 59,535 59,535 309,535 57,300 57,300 307,300
14 63 63 4,000 82,314 66,160 66,160 316,160 63,262 63,262 313,262
15 64 64 4,000 90,630 73,079 73,079 323,079 69,354 69,354 319,354
16 65 65 4,000 99,361 80,272 80,272 330,272 75,547 75,547 325,547
17 66 66 4,000 108,530 87,766 87,766 337,766 81,815 81,815 331,815
18 67 67 4,000 118,156 95,562 95,562 345,562 88,128 88,128 338,128
19 68 68 4,000 128,264 103,664 103,664 353,664 94,449 94,449 344,449
20 69 69 4,000 138,877 112,071 112,071 362,071 100,734 100,734 350,734
21 70 70 4,000 150,021 120,896 120,896 370,896 107,021 107,021 357,021
22 71 71 4,000 161,722 130,035 130,035 380,035 113,110 113,110 363,110
23 72 72 4,000 174,008 139,473 139,473 389,473 118,928 118,928 368,928
24 73 73 4,000 186,908 149,196 149,196 399,196 124,308 124,308 374,308
25 74 74 4,000 200,454 159,181 159,181 409,181 129,076 129,076 379,076
26 75 75 4,000 214,677 169,392 169,392 419,392 133,057 133,057 383,057
27 76 76 4,000 229,610 179,784 179,784 429,784 136,059 136,059 386,059
28 77 77 4,000 245,291 190,295 190,295 440,295 137,889 137,889 387,889
29 78 78 4,000 261,755 200,848 200,848 450,848 138,340 138,340 388,340
30 79 79 4,000 279,043 211,352 211,352 461,352 137,175 137,175 387,175
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
51
<PAGE> 57
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION B) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 12.00% (NET RATE OF 10.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,527 3,202 253,202 2,527 3,202 253,202
2 51 51 4,000 8,610 6,465 7,140 257,140 6,465 7,140 257,140
3 52 52 4,000 13,241 10,821 11,496 261,496 10,807 11,482 261,482
4 53 53 4,000 18,103 15,639 16,314 266,314 15,593 16,268 266,268
5 54 54 4,000 23,208 20,970 21,645 271,645 20,867 21,542 271,542
6 55 55 4,000 28,568 26,941 27,541 277,541 26,750 27,350 277,350
7 56 56 4,000 34,196 33,616 34,066 284,066 33,290 33,740 283,740
8 57 57 4,000 40,106 40,980 41,280 291,280 40,470 40,770 290,770
9 58 58 4,000 46,312 49,109 49,259 299,259 48,351 48,501 298,501
10 59 59 4,000 52,827 58,081 58,081 308,081 56,998 56,998 306,998
11 60 60 4,000 59,669 68,396 68,396 318,396 66,889 66,889 316,889
12 61 61 4,000 66,852 79,806 79,806 329,806 77,760 77,760 327,760
13 62 62 4,000 74,395 92,433 92,433 342,433 89,698 89,698 339,698
14 63 63 4,000 82,314 106,395 106,395 356,395 102,792 102,792 352,792
15 64 64 4,000 90,630 121,837 121,837 371,837 117,137 117,137 367,137
16 65 65 4,000 99,361 138,886 138,886 388,886 132,831 132,831 382,831
17 66 66 4,000 108,530 157,726 157,726 407,726 149,990 149,990 399,990
18 67 67 4,000 118,156 178,540 178,540 428,540 168,734 168,734 418,734
19 68 68 4,000 128,264 201,526 201,526 451,526 189,195 189,195 439,195
20 69 69 4,000 138,877 226,904 226,904 476,904 211,514 211,514 461,514
21 70 70 4,000 150,021 255,146 255,146 505,146 236,038 236,038 486,038
22 71 71 4,000 161,722 286,337 286,337 536,337 262,709 262,709 512,709
23 72 72 4,000 174,008 320,770 320,770 570,770 291,697 291,697 541,697
24 73 73 4,000 186,908 358,766 358,766 608,766 323,094 323,094 573,094
25 74 74 4,000 200,454 400,675 400,675 650,675 357,008 357,008 607,008
26 75 75 4,000 214,677 446,872 446,872 696,872 393,563 393,563 643,563
27 76 76 4,000 229,610 497,767 497,767 747,767 432,890 432,890 682,890
28 77 77 4,000 245,291 553,799 553,799 803,799 475,141 475,141 725,141
29 78 78 4,000 261,755 615,439 615,439 865,439 520,485 520,485 770,485
30 79 79 4,000 279,043 683,206 683,206 933,206 569,083 569,083 819,083
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
52
<PAGE> 58
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION C) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 0.00% (NET RATE OF -1.33%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,147 2,822 250,000 2,147 2,822 250,000
2 51 51 4,000 8,610 5,294 5,969 250.000 5,294 5,969 250,000
3 52 52 4,000 13,241 8,398 9,073 250,000 8,385 9,060 250,000
4 53 53 4,000 18,103 11,458 12,133 250,000 11,419 12,094 250,000
5 54 54 4,000 23,208 14,477 15,152 250,000 14,393 15,068 250,000
6 55 55 4,000 28,568 17,528 18,128 250.000 17,377 17,977 250,000
7 56 56 4,000 34,196 20,614 21,064 250,000 20,367 20,817 250,000
8 57 57 4,000 40,106 23,656 23,956 250,000 23,285 23,585 250,000
9 58 58 4,000 46,312 26,655 26,805 250,000 26,126 26,276 250,000
10 59 59 4,000 52,827 29,610 29,610 250,000 28,886 28,886 250,000
11 60 60 4,000 59,669 32,866 32,866 250,000 31,899 31,899 250,000
12 61 61 4,000 66,852 36,071 36,071 250,000 34,812 34,812 250,000
13 62 62 4,000 74,395 39,227 39,227 250,000 37,609 37,609 250,000
14 63 63 4,000 82,314 42,326 42,326 250,000 40,277 40,277 250,000
15 64 64 4,000 90,630 45,370 45,370 250,000 42,794 42,794 250,000
16 65 65 4,000 99,361 48,335 48,335 250,000 45,138 45,138 250,000
17 66 66 4,000 108,530 51,233 51,233 250,000 47,290 47,290 250,000
18 67 67 4,000 118,156 54,056 54,056 250,000 49,228 49,228 250,000
19 68 68 4,000 128,264 56,798 56,798 250,000 50,928 50,928 250,000
20 69 69 4,000 138,877 59,449 59,449 250,000 52,361 52,361 250,000
21 70 70 4,000 150,021 62,065 62,065 250,000 53,539 53,539 250,000
22 71 71 4,000 161,722 64,572 64,572 250,000 54,334 54,334 250,000
23 72 72 4,000 174,008 66,955 66,955 250,000 54,701 54,701 250,000
24 73 73 4,000 186,908 69,196 69,196 250,000 54,525 54,525 250,000
25 74 74 4,000 200,454 71,273 71,273 250,000 53,687 53,687 250,000
26 75 75 4,000 214,677 73,159 73,159 250,000 52,062 52,062 250,000
27 76 76 4,000 229,610 74,819 74,819 250,000 49,511 49,511 250,000
28 77 77 4,000 245,291 76,213 76,213 250,000 45,877 45,877 250,000
29 78 78 4,000 261,755 77,289 77,289 250,000 40,987 40,987 250,000
30 79 79 4,000 279,043 77,990 77,990 250,000 34,581 34,581 250,000
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
53
<PAGE> 59
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>m
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION C) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 6.00% (NET RATE OF 4.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,337 3,012 250,000 2,337 3,012 250,000
2 51 51 4,000 8,610 5,868 6,543 250.000 5,868 6,543 250,000
3 52 52 4,000 13,241 9,563 10,238 250,000 9,550 10,225 250,000
4 53 53 4,000 18,103 13,427 14,102 250,000 13,387 14,062 250,000
5 54 54 4,000 23,208 17,473 18,148 250,000 17,382 18,057 250,000
6 55 55 4,000 28,568 21,778 22,378 250.000 21,615 22,215 250,000
7 56 56 4,000 34,196 26,357 26,807 250,000 26,087 26,537 250,000
8 57 57 4,000 40,106 31,136 31,436 250,000 30,727 31,027 250,000
9 58 58 4,000 46,312 36,129 36,279 250,000 35,538 35,688 250,000
10 59 59 4,000 52,827 41,342 41,342 250,000 40,524 40,524 250,000
11 60 60 4,000 59,669 47,160 47,160 250,000 46,059 46,059 250,000
12 61 61 4,000 66,852 53,245 53,245 250,000 51,801 51,801 250,000
13 62 62 4,000 74,395 59,614 59,614 250,000 57,748 57,748 250,000
14 63 63 4,000 82,314 66,270 66,270 250,000 63,897 63,897 250,000
15 64 64 4,000 90,630 73,231 73,231 250,000 70,244 70,244 250,000
16 65 65 4,000 99,361 80,489 80,489 250,000 76,783 76,783 250,000
17 66 66 4,000 108,530 88,071 88,071 250,000 83,512 83,512 250,000
18 67 67 4,000 118,156 95,987 95,987 250,000 90,432 90,432 250,000
19 68 68 4,000 128,264 104,251 104,251 250,000 97,542 97,542 250,000
20 69 69 4,000 138,877 112,875 112,875 250,000 104,845 104,845 250,000
21 70 70 4,000 150,021 121,991 121,991 250,000 112,444 112,444 250,000
22 71 71 4,000 161,722 131,513 131,513 250,000 120,223 120,223 250,000
23 72 72 4,000 174,008 141,460 141,460 250,000 128,196 128,196 250,000
24 73 73 4,000 186,908 151,852 151,852 250,000 136,338 136,338 250,000
25 74 74 4,000 200,454 162,706 162,706 256,376 144,644 144,644 250,000
26 75 75 4,000 214,677 174,002 174,002 266,606 153,123 153,123 250,000
27 76 76 4,000 229,610 185,742 185,742 277,034 161,805 161,805 250,000
28 77 77 4,000 245,291 197,928 197,928 287,747 170,739 170,739 250,000
29 78 78 4,000 261,755 210,557 210,557 298,696 179,913 179,913 255,224
30 79 79 4,000 279,043 223,630 223,630 309,928 189,162 189,162 262,159
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
54
<PAGE> 60
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $250,000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION C) FEMALE PREFERRED NONSMOKER AGE 50
ANNUAL PREMIUM = $4,000
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS ANNUAL RATE OF RETURN OF 12.00% (NET RATE OF 10.67%)
ASSUMING CURRENT CHARGES ASSUMING GUARANTEED CHARGES
------------------------ ---------------------------
END PREMIUM
OF ANNUAL ACCUM SURRENDER FUND DEATH SURRENDER FUND DEATH
YEAR AGE AGE PAYMENT @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 50 50 4,000 4,200 2,527 3,202 250,000 2,527 3,202 250,000
2 51 51 4,000 8,610 6,465 7,140 250.000 6,465 7,140 250,000
3 52 52 4,000 13,241 10,823 11,498 250,000 10,809 11,484 250,000
4 53 53 4,000 18,103 15,642 16,317 250,000 15,599 16,274 250,000
5 54 54 4,000 23,208 20,976 21,651 250,000 20,880 21,555 250,000
6 55 55 4,000 28,568 26,950 27,550 250.000 26,775 27,375 250,000
7 56 56 4,000 34,196 33,630 34,080 250,000 33,336 33,786 250,000
8 57 57 4,000 40,106 41,000 41,300 250,000 40,550 40,850 250,000
9 58 58 4,000 46,312 49,139 49,289 250,000 48,482 48,632 250,000
10 59 59 4,000 52,827 58,125 58,125 250,000 57,207 57,207 250,000
11 60 60 4,000 59,669 68,459 68,459 250,000 67,213 67,213 250,000
12 61 61 4,000 66,852 79,897 79,897 250,000 78,253 78,253 250,000
13 62 62 4,000 74,395 92,563 92,563 250,000 90,433 90,433 250,000
14 63 63 4,000 82,314 106,583 106,583 250,000 103,875 103,875 250,000
15 64 64 4,000 90,630 122,104 122,104 266,761 118,710 118,710 259,346
16 65 65 4,000 99,361 139,259 139,259 293,614 135,019 135,019 284,675
17 66 66 4,000 108,530 158,228 158,228 322,120 152,914 152,914 311,302
18 67 67 4,000 118,156 179,194 179,194 352,456 172,527 172,527 339,344
19 68 68 4,000 128,264 202,360 202,360 384,787 194,004 194,004 368,899
20 69 69 4,000 138,877 227,947 227,947 419,286 217,498 217,498 400,066
21 70 70 4,000 150,021 256,431 256,431 456,575 243,382 243,382 433,341
22 71 71 4,000 161,722 287,898 287,898 496,537 271,619 271,619 468,461
23 72 72 4,000 174,008 322,641 322,641 539,487 302,394 302,394 505,634
24 73 73 4,000 186,908 360,981 360,981 585,655 335,837 335,837 544,862
25 74 74 4,000 200,454 403,268 403,268 635,430 372,088 372,088 586,298
26 75 75 4,000 214,677 449,873 449,873 689,295 411,298 411,298 630,191
27 76 76 4,000 229,610 501,198 501,198 747,537 453,636 453,636 676,598
28 77 77 4,000 245,291 557,672 557,672 810,743 499,285 499,285 725,861
29 78 78 4,000 261,755 619,749 619,749 879,176 548,456 548,456 778,040
30 79 79 4,000 279,043 687,925 687,925 953,395 601,362 601,362 833,427
</TABLE>
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES FOR THE EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN.
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND UPON
A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS OF THE FUNDS SELECTED. THE CASH VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR
INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE MADE BY THE COMPANY,
WALNUT STREET SECURITIES, THE FUNDS, OR ANY REPRESENTATIVE THEREOF, THAT THIS
HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED
OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE POLICY
ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID BY THE
COMPANY.
55
<PAGE> 61
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company
and Policyholders of General American
Separate Account Eleven:
We have audited the statements of assets and liabilities, including the
schedule of investments, of the S & P 500 Index, Money Market, Bond Index,
Managed Equity, Asset Allocation, International Index, Mid-Cap Equity,
Small-Cap Equity, Equity-Income, Growth, Overseas, Asset Manager, High
Income, Worldwide Hard Assets, Multi-style Equity, Core Bond, Aggressive
Equity, and Non-US Fund Divisions of General American Separate Account
Eleven as of December 31, 1997, and the related statements of operations and
changes in net assets for each of the years in the three-year period then
ended. These financial statements are the responsibility of the management
of General American Separate Account Eleven. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Investments owned as of December 31, 1997 were verified by audit of the
statements of assets and liabilities of the underlying portfolios of General
American Capital Company and confirmation by correspondence with respect to
the Variable Insurance Products Fund and the Variable Insurance Products
Fund II sponsored by Fidelity Investments, the Van Eck World Wide Insurance
Trust sponsored by Van Eck Associates Corporation, and the Russell Insurance
Funds sponsored by Frank Russell Investment Company. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the S & P 500 Index,
Money Market, Bond Index, Managed Equity, Asset Allocation, International
Index, Mid-Cap Equity, Small-Cap Equity, Equity-Income, Growth, Overseas,
Asset Manager, High Income, Worldwide Hard Assets, Multi-Style Equity, Core
Bond, Aggressive Equity, and Non-US Fund Divisions of General American
Separate Account Eleven as of December 31, 1997, the results of their
operations and changes in their net assets for each of the years in the
three-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
February 9, 1998
<PAGE> 62
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington, D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
If distributed to prospective investors, this report must be preceded or
accompanied by a current prospectus.
The prospectus is incomplete without reference to the financial data
contained in the annual report.
<PAGE> 63
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company at market value
(see Schedule of Investments): $20,581,893 $8,600,564 $3,450,248 $4,241,762 $10,482,605
Receivable from General American Life
Insurance Company 0 715,691 0 0 0
----------- ---------- ---------- ---------- -----------
Total assets 20,581,893 9,316,255 3,450,248 4,241,762 10,482,605
----------- ---------- ---------- ---------- -----------
Liabilities:
Payable to General American Life
Insurance Company 3,570 0 1,704 6,447 6,300
----------- ---------- ---------- ---------- -----------
Total net assets $20,578,323 $9,316,255 $3,448,544 $4,235,315 $10,476,305
=========== ========== ========== ========== ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 8,460,347 $ 782,727 $2,066,526 $2,634,705 $ 8,267,995
Individual Variable General Select Plus
cash value invested in Separate Account 5,747,133 6,532,380 655,815 740,703 1,259,015
Individual Variable Universal Life-100
cash value invested in Separate Account 6,370,843 1,911,272 726,203 859,907 949,295
Russell Variable Universal Life
cash value invested in Separate Account 0 89,876 0 0 0
----------- ---------- ---------- ---------- -----------
Total net assets $20,578,323 $9,316,255 $3,448,544 $4,235,315 $10,476,305
=========== ========== ========== ========== ===========
Total units held - VUL-95 236,305 46,703 97,454 92,710 282,838
Total units held - VGSP 248,494 535,853 50,400 37,481 72,507
Total units held - VUL-100 292,865 166,128 55,636 44,402 55,074
Total units held - Russell VUL 0 8,547 0 0 0
VUL-95 Net unit value $ 35.80 $ 16.76 $ 21.21 $ 28.42 $ 29.23
VGSP Net unit value $ 23.13 $ 12.19 $ 13.01 $ 19.76 $ 17.36
VUL-100 Net unit value $ 21.75 $ 11.50 $ 13.05 $ 19.37 $ 17.24
Russell VUL Net unit value $ 10.52
Cost of investments $17,072,779 $8,673,549 $3,434,435 $3,756,762 $ 8,720,069
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 64
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
INTERNATIONAL MID-CAP SMALL-CAP EQUITY-
INDEX EQUITY EQUITY INCOME GROWTH
FUND DIVISION<F*> FUND DIVISION<F**> FUND DIVISION FUND DIVISION FUND DIVISION
----------------- ------------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company at market value
(see Schedule of Investments): $7,866,879 $6,232,329 $1,143,813 $ 0 $ 0
Investments in Variable Insurance
Products Fund at market value
(see Schedule of Investments): 0 0 0 17,001,106 22,237,647
Receivable from General American
Life Insurance Company 0 2,387 41 0 0
---------- ---------- ---------- ----------- -----------
Total assets 7,866,879 6,234,716 1,143,854 17,001,106 22,237,647
---------- ---------- ---------- ----------- -----------
Liabilities:
Payable to General American Life
Insurance Company 2,586 0 0 5,289 9,056
---------- ---------- ---------- ----------- -----------
Total net assets $7,864,293 $6,234,716 $1,143,854 $16,995,817 $22,228,591
========== ========== ========== =========== ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $2,758,129 $3,609,898 $ 458,303 $ 6,510,189 $ 8,787,216
Individual Variable General Select Plus
cash value invested in Separate Account 953,767 1,616,472 391,596 5,047,948 6,674,197
Individual Variable Universal Life-100
cash value invested in Separate Account 966,544 1,008,346 293,955 5,437,680 6,767,178
General American Life Insurance
Company seed money 3,185,853 0 0 0 0
---------- ---------- ---------- ----------- -----------
Total net assets $7,864,293 $6,234,716 $1,143,854 $16,995,817 $22,228,591
========== ========== ========== =========== ===========
Total units held - VUL-95 175,226 174,121 35,177 292,344 407,913
Total units held - VGSP 70,058 77,919 30,027 226,141 328,018
Total units held - VUL-100 83,423 53,229 22,570 282,274 362,381
Total units held - Seed Money 200,000 0 0 0 0
VUL-95 Net unit value $ 15.74 $ 20.73 $ 13.03 $ 22.27 $ 21.54
VGSP Net unit value $ 13.61 $ 20.75 $ 13.04 $ 22.32 $ 20.35
VUL-100 Net unit value $ 11.59 $ 18.94 $ 13.02 $ 19.26 $ 18.67
Cost of investments $7,797,863 $5,262,750 $1,277,188 $13,670,582 $17,509,262
<FN>
<F*> This fund was formerly known as the International Equity Fund.
<F**>This fund was formerly known as the Special Equity Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 65
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
ASSET HIGH WORLDWIDE
OVERSEAS MANAGER INCOME HARD ASSETS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION<F*>
------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Assets:
Investments in Variable Insurance
Products Fund at market value
(see Schedule of Investments): $8,174,972 $ 0 $2,175,014 $ 0
Investments in Variable Insurance
Products Fund II at market value
(see Schedule of Investments): 0 577,825 0 0
Investments in Van Eck Worldwide
Insurance Trust at market value
(see Schedule of Investments): 0 0 0 269,764
Receivable from General American
Life Insurance Company 0 0 0 41
---------- -------- ---------- --------
Total assets 8,174,972 577,825 2,175,014 269,805
---------- -------- ---------- --------
Liabilities:
Payable to General American Life
Insurance Company 3,488 368 2,095 0
---------- -------- ---------- --------
Total net assets $8,171,484 $577,457 $2,172,919 $269,805
========== ======== ========== ========
Total net assets represented by:
Individual Variable Universal Life
cash value invested in Separate Account $4,197,173 $ 30,870 $ 264,448 $117,116
Individual Variable General Select Plus
cash value invested in Separate Account 2,612,802 111,623 923,865 32,914
Individual Variable Universal Life-100
cash value invested in Separate Account 1,361,509 434,964 984,606 119,775
---------- -------- ---------- --------
Total net assets $8,171,484 $577,457 $2,172,919 $269,805
========== ======== ========== ========
Total units held - VUL-95 242,563 2,132 18,572 10,326
Total units held - VGSP 168,708 7,680 64,632 2,892
Total units held - VUL-100 100,943 30,075 69,238 10,573
VUL-95 Net unit value $ 17.30 $ 14.48 $ 14.24 $ 11.34
VGSP Net unit value $ 15.49 $ 14.53 $ 14.29 $ 11.38
VUL-100 Net unit value $ 13.49 $ 14.46 $ 14.22 $ 11.33
Cost of investments $7,472,992 $523,566 $1,954,241 $280,524
<FN>
<F*>This fund was formerly known as the Gold & Natural Resources Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 66
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in Russell Insurance Fund
at market value
(see Schedule of Investments): $2,538,339 $1,153,638 $1,344,291 $782,951
Receivable from General American
Life Insurance Company 941 769 1,134 892
---------- ---------- ---------- --------
Total assets 2,539,280 1,154,407 1,345,425 783,843
---------- ---------- ---------- --------
Liabilities:
Payable to General American Life
Insurance Company 0 0 0 0
---------- ---------- ---------- --------
Total net assets $2,539,280 $1,154,407 $1,345,425 $783,843
========== ========== ========== ========
Total net assets represented by:
Individual Variable General Select Plus
cash value invested in Separate Account $ 601,650 $ 235,820 $ 335,282 $293,990
Russell Variable Universal Life
cash value invested in Separate Account 1,937,630 918,587 1,010,143 489,853
---------- ---------- ---------- --------
Total net assets $2,539,280 $1,154,407 $1,345,425 $783,843
========== ========== ========== ========
Total units held - VGSP 46,930 21,414 25,100 28,578
Total units held - Russell VUL 151,491 84,125 75,156 49,083
VGSP Net unit value $ 12.82 $ 11.01 $ 13.36 $ 10.29
Russell VUL Net unit value $ 12.79 $ 10.92 $ 13.44 $ 9.98
Cost of investments $2,536,786 $1,126,156 $1,320,664 $840,268
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 67
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
---------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F*> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (59,320) (38,288) (31,973) (7,951) (8,690) (13,058)
Mortality and expense charges - VGSP (29,674) (16,887) (3,459) (12,872) (21,323) (8,747)
Mortality and expense charges - VUL-100 (36,234) (9,712) (233) (13,566) (10,113) (1,350)
Mortality and expense charges - Russell VUL 0 0 0 (1,626) 0 0
---------- ---------- ---------- --------- --------- ---------
Total expenses (125,228) (64,887) (35,665) (36,015) (40,126) (23,155)
---------- ---------- ---------- --------- --------- ---------
Net investment expense (125,228) (64,887) (35,665) (36,015) (40,126) (23,155)
---------- ---------- ---------- --------- --------- ---------
Net realized gain on investments:
Realized gain from distributions 913,559 435,253 128,459 121,801 363,544 231,929
Realized gain (loss) on sales 1,570,537 244,401 339,252 (48,325) 14,173 65,400
---------- ---------- ---------- --------- --------- ---------
Net realized gain on investments 2,484,096 679,654 467,711 73,476 377,717 297,329
---------- ---------- ---------- --------- --------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 1,982,215 851,246 (10,068) (256,852) (158,740) (31,189)
Unrealized gain (loss) on investments,
end of period 3,509,114 1,982,215 851,246 (72,985) (256,852) (158,740)
---------- ---------- ---------- --------- --------- ---------
Net unrealized gain (loss) on investments 1,526,899 1,130,969 861,314 183,867 (98,112) (127,551)
---------- ---------- ---------- --------- --------- ---------
Net gain on investments 4,010,995 1,810,623 1,329,025 257,343 279,605 169,778
---------- ---------- ---------- --------- --------- ---------
Net increase in net assets
resulting from operations $3,885,767 $1,745,736 $1,293,360 $ 221,328 $ 239,479 $ 146,623
========== ========== ========== ========= ========= =========
<FN>
<F*>See Note 2C.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 68
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
--------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
--------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F*> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (14,601) (11,376) (18,478) (20,327) (16,463) (16,717)
Mortality and expense charges - VGSP (3,943) (10,234) (153) (4,370) (1,751) (208)
Mortality and expense charges - VUL-100 (4,363) (1,802) (24) (4,815) (1,080) (40)
--------- --------- --------- -------- -------- ---------
Total expenses (22,907) (23,412) (18,655) (29,512) (19,294) (16,965)
--------- --------- --------- -------- -------- ---------
Net investment expense (22,907) (23,412) (18,655) (29,512) (19,294) (16,965)
--------- --------- --------- -------- -------- ---------
Net realized gain (loss) on investments:
Realized gain from distributions 165,804 496,106 70,070 251,405 292,621 193,544
Realized gain (loss) on sales (176,276) (15,797) (31,850) 95,532 11,431 (1,087)
--------- --------- --------- -------- -------- ---------
Net realized gain (loss) on investments (10,472) 480,309 38,220 346,937 304,052 192,457
--------- --------- --------- -------- -------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (234,659) 19,005 (313,506) 116,769 (26,912) (408,116)
Unrealized gain (loss) on investments,
end of period 15,812 (234,659) 19,005 485,000 116,769 (26,912)
--------- --------- --------- -------- -------- ---------
Net unrealized gain (loss) on investments 250,471 (253,664) 332,511 368,231 143,681 381,204
--------- --------- --------- -------- -------- ---------
Net gain on investments 239,999 226,645 370,731 715,168 447,733 573,661
--------- --------- --------- -------- -------- ---------
Net increase in net assets
resulting from operations $ 217,092 $ 203,233 $ 352,076 $685,656 $428,439 $ 556,696
========= ========= ========= ======== ======== =========
<FN>
<F*>See Note 2C.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 69
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
---------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (67,466) (52,462) (46,892) (23,446) (19,773) (13,991)
Mortality and expense charges - VGSP (7,499) (5,214) (5,214) (5,564) (3,014) (2,260)
Mortality and expense charges - VUL-100 (5,279) (1,078) (10) (6,468) (2,475) (66)
Mortality and expense charges - Seed Money 0 0 0 (27,476) (25,684) (23,784)
---------- ---------- ---------- --------- -------- ---------
Total expenses (80,244) (58,754) (52,116) (62,954) (50,946) (40,101)
---------- ---------- ---------- --------- -------- ---------
Net investment expense (80,244) (58,754) (52,116) (62,954) (50,946) (40,101)
---------- ---------- ---------- --------- -------- ---------
Net realized gain on investments:
Realized gain from distributions 311,438 554,498 474,238 220,590 164,186 514,927
Realized gain on sales 195,821 36,291 131,272 136,741 43,830 41,508
---------- ---------- ---------- --------- -------- ---------
Net realized gain on investments: 507,259 590,789 605,510 357,331 208,016 556,435
---------- ---------- ---------- --------- -------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 657,734 197,823 (765,423) 268,331 40,286 198,307
Unrealized gain on investments,
end of period 1,762,536 657,734 197,823 69,016 268,331 40,286
---------- ---------- ---------- --------- -------- ---------
Net unrealized gain (loss) on investments 1,104,802 459,911 963,246 (199,315) 228,045 (158,021)
---------- ---------- ---------- --------- -------- ---------
Net gain on investments 1,612,061 1,050,700 1,568,756 158,016 436,061 398,414
---------- ---------- ---------- --------- -------- ---------
Net increase in net assets
resulting from operations $1,531,817 $ 991,946 $1,516,640 $ 95,062 $385,115 $ 358,313
========== ========== ========== ========= ======== =========
<FN>
<F*> This fund was formerly known as the International Equity Fund.
<F**>See Note 2C.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 70
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------
1997 1996 1995 1997<F***>
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (26,828) (21,527) (16,741) (787)
Mortality and expense charges - VGSP (7,567) (4,349) (3,645) (869)
Mortality and expense charges - VUL-100 (6,142) (2,084) (72) (627)
Mortality and expense charges - Seed Money 0 (5,213) (11,191) 0
---------- ---------- -------- ---------
Total expenses (40,537) (33,173) (31,649) (2,283)
---------- ---------- -------- ---------
Net investment expense (40,537) (33,173) (31,649) (2,283)
---------- ---------- -------- ---------
Net realized gain on investments:
Realized gain from distributions 262,603 805,221 210,225 149,353
Realized gain on sales 188,905 417,832 121,217 1,064
---------- ---------- -------- ---------
Net realized gain on investments: 451,508 1,223,053 331,442 150,417
---------- ---------- -------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 24,121 464,281 75,550 0
Unrealized gain (loss) on investments,
end of period 969,578 24,121 464,281 (133,375)
---------- ---------- -------- ---------
Net unrealized gain (loss) on investments 945,457 (440,160) 388,731 (133,375)
---------- ---------- -------- ---------
Net gain on investments 1,396,965 782,893 720,173 17,042
---------- ---------- -------- ---------
Net increase in net assets
resulting from operations $1,356,428 $ 749,720 $688,524 $ 14,759
========== ========== ======== =========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**> See Note 2C.
<F***>The Small-Cap Equity Fund began operations on May 1, 1997.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 71
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 186,680 $ 9,260 $ 94,314 $ 94,061 $ 21,639 $ 21,771
Expenses:
Mortality and expense charges - VUL-95 (49,108) (38,120) (24,157) (65,287) (51,026) (34,577)
Mortality and expense charges - VGSP (27,082) (13,918) (6,731) (37,459) (19,582) (11,893)
Mortality and expense charges - VUL-100 (34,605) (10,210) (378) (42,613) (14,179) (439)
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (110,795) (62,248) (31,266) (145,359) (84,787) (46,909)
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) 75,885 (52,988) 63,048 (51,298) (63,148) (25,138)
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments:
Realized gain from distributions 938,582 265,454 125,686 421,033 546,396 0
Realized gain on sales 310,747 130,118 67,467 381,175 254,460 176,048
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments: 1,249,329 395,572 193,153 802,208 800,856 176,048
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of period 1,528,943 868,207 17,485 2,039,425 1,501,642 51,539
Unrealized gain on investments,
end of period 3,330,524 1,528,943 868,207 4,728,383 2,039,425 1,501,642
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain on investments 1,801,581 660,736 850,722 2,688,958 537,783 1,450,103
---------- ---------- ---------- ---------- ---------- ----------
Net gain on investments 3,050,910 1,056,308 918,189 3,491,166 1,338,639 1,626,151
---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations $3,126,795 $1,003,320 $1,106,923 $3,439,868 $1,275,491 $1,601,013
========== ========== ========== ========== ========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 72
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995<F*>
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 98,942 $ 41,332 $ 8,707 $ 9,219 $ 2,632 $ 0
Expenses:
Mortality and expense charges - VUL-95 (32,823) (24,616) (17,340) (219) (126) (3)
Mortality and expense charges - VGSP (15,095) (8,371) (5,232) (597) (193) (20)
Mortality and expense charges - VUL-100 (9,246) (3,542) (152) (2,776) (1,031) (29)
-------- -------- -------- ------- ------- ------
Total expenses (57,164) (36,529) (22,724) (3,592) (1,350) (52)
-------- -------- -------- ------- ------- ------
Net investment income (loss) 41,778 4,803 (14,017) 5,627 1,282 (52)
-------- -------- -------- ------- ------- ------
Net realized gain on investments:
Realized gain from distributions 392,769 45,464 8,707 23,126 2,171 0
Realized gain on sales 73,551 42,658 19,162 10,620 1,016 13
-------- -------- -------- ------- ------- ------
Net realized gain on investments: 466,320 88,122 27,869 33,746 3,187 13
-------- -------- -------- ------- ------- ------
Net unrealized gain on investments:
Unrealized gain (loss) on investments,
beginning of period 639,437 210,998 (36,045) 19,793 1,779 0
Unrealized gain on investments,
end of period 710,980 639,437 210,998 54,259 19,793 1,779
-------- -------- -------- ------- ------- ------
Net unrealized gain on investments 62,543 428,439 247,043 34,466 18,014 1,779
-------- -------- -------- ------- ------- ------
Net gain on investments 528,863 516,561 266,205 68,212 21,201 1,792
-------- -------- -------- ------- ------- ------
Net increase in net assets
resulting from operations $570,641 $521,364 $260,895 $73,839 $22,483 $1,740
======== ======== ======== ======= ======= ======
<FN>
<F*>The Asset Manager Fund began operations on July 19, 1995.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 73
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
---------------------------------- -----------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
-------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 91,441 $28,732 $ 0 $ 3,388 $ 1,298 $ 32
Expenses:
Mortality and expense charges - VUL-95 (2,255) (1,639) (122) (754) (389) (3)
Mortality and expense charges - VGSP (4,993) (1,456) (55) (186) (214) 0
Mortality and expense charges - VUL-100 (6,583) (2,645) (76) (917) (410) (11)
-------- ------- ------ -------- ------- ----
Total expenses (13,831) (5,740) (253) (1,857) (1,013) (14)
-------- ------- ------ -------- ------- ----
Net investment income (loss) 77,610 22,992 (253) 1,531 285 18
-------- ------- ------ -------- ------- ----
Net realized gain (loss) on investments:
Realized gain from distributions 11,302 5,621 0 4,590 1,273 0
Realized gain (loss) on sales 17,736 (202) 1,132 (1,380) 1,682 (5)
-------- ------- ------ -------- ------- ----
Net realized gain (loss) on investments: 29,038 5,419 1,132 3,210 2,955 (5)
-------- ------- ------ -------- ------- ----
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 57,062 2,337 0 3,346 370 0
Unrealized gain (loss) on investments,
end of period 220,773 57,062 2,337 (10,760) 3,346 370
-------- ------- ------ -------- ------- ----
Net unrealized gain (loss) on investments 163,711 54,725 2,337 (14,106) 2,976 370
-------- ------- ------ -------- ------- ----
Net gain (loss) on investments 192,749 60,144 3,469 (10,896) 5,931 365
-------- ------- ------ -------- ------- ----
Net increase (decrease) in net assets
resulting from operations $270,359 $83,136 $3,216 $ (9,365) $ 6,216 $383
======== ======= ====== ======== ======= ====
<FN>
<F*> The High Income Fund and Worldwide Hard Assets Fund began operations on May
24, and August 9, 1995, respectively.
<F**>This fund was formerly known as the Gold & Natural Resources Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 74
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*>
----------------- ----------------- ----------------- -----------------
1997 1997 1997 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $ 599 $ 2,483 $ 23 $ 0
Expenses:
Mortality and expense charges - VGSP (996) (408) (505) (496)
Mortality and expense charges - Russell VUL (1,582) (1,146) (682) (649)
------- ------- ------- --------
Total expenses (2,578) (1,554) (1,187) (1,145)
------- ------- ------- --------
Net investment income (loss) (1,979) 929 (1,164) (1,145)
------- ------- ------- --------
Net realized gain on investments:
Realized gain from distributions 0 0 0 0
Realized gain on sales 5,224 705 2,158 78
------- ------- ------- --------
Net realized gain on investments: 5,224 705 2,158 78
------- ------- ------- --------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 0 0 0 0
Unrealized gain (loss) on investments,
end of period 1,553 27,482 23,627 (57,317)
------- ------- ------- --------
Net unrealized gain (loss) on investments 1,553 27,482 23,627 (57,317)
------- ------- ------- --------
Net gain (loss) on investments 6,777 28,187 25,785 (57,239)
------- ------- ------- --------
Net increase (decrease) in net assets
resulting from operations $ 4,798 $29,116 $24,621 $(58,384)
======= ======= ======= ========
<FN>
<F*>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 75
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
------------------------------------ ----------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (125,228) $ (64,887) $ (35,665) $ (36,015) $ (40,126) $ (23,155)
Net realized gain on investments 2,484,096 679,654 467,711 73,476 377,717 297,329
Net unrealized gain (loss) on investments 1,526,899 1,130,969 861,314 183,867 (98,112) (127,551)
----------- ----------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 3,885,767 1,745,736 1,293,360 221,328 239,479 146,623
Net deposits into (deductions from)
Separate Account 2,209,424 8,067,322 (145,477) 932,501 3,557,381 2,340,021
----------- ----------- ---------- ---------- ---------- ----------
Increase in net assets 6,095,191 9,813,058 1,147,883 1,153,829 3,796,860 2,486,644
Net assets, beginning of period 14,483,132 4,670,074 3,522,191 8,162,426 4,365,566 1,878,922
----------- ----------- ---------- ---------- ---------- ----------
Net assets, end of period $20,578,323 $14,483,132 $4,670,074 $9,316,255 $8,162,426 $4,365,566
=========== =========== ========== ========== ========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 76
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------ ----------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (22,907) $ (23,412) $ (18,655) $ (29,512) $ (19,294) $ (16,965)
Net realized gain (loss) on investments (10,472) 480,309 38,220 346,937 304,052 192,457
Net unrealized gain (loss) on investments 250,471 (253,664) 332,511 368,231 143,681 381,204
----------- ---------- ----------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 217,092 203,233 352,076 685,656 428,439 556,696
Net deposits into (deductions from)
Separate Account (3,532,130) 5,128,242 (1,271,114) 779,803 436,005 (487,360)
----------- ---------- ----------- ---------- ---------- ----------
Increase (decrease) in net assets (3,315,038) 5,331,475 (919,038) 1,465,459 864,444 69,336
Net assets, beginning of period 6,763,582 1,432,107 2,351,145 2,769,856 1,905,412 1,836,076
----------- ---------- ----------- ---------- ---------- ----------
Net assets, end of period $ 3,448,544 $6,763,582 $ 1,432,107 $4,235,315 $2,769,856 $1,905,412
=========== ========== =========== ========== ========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 77
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
----------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (80,244) $ (58,754) $ (52,116) $ (62,954) $ (50,946) $ (40,101)
Net realized gain on investments 507,259 590,789 605,510 357,331 208,016 556,435
Net unrealized gain (loss) on investments 1,104,802 459,911 963,246 (199,315) 228,045 (158,021)
----------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 1,531,817 991,946 1,516,640 95,062 385,115 358,313
Net deposits into (deductions from)
Separate Account 909,812 1,086,684 (709,124) 979,833 1,016,960 789,597
----------- ---------- ---------- ---------- ---------- ----------
Increase in net assets 2,441,629 2,078,630 807,516 1,074,895 1,402,075 1,147,910
Net assets, beginning of period 8,034,676 5,956,046 5,148,530 6,789,398 5,387,323 4,239,413
----------- ---------- ---------- ---------- ---------- ----------
Net assets, end of period $10,476,305 $8,034,676 $5,956,046 $7,864,293 $6,789,398 $5,387,323
=========== ========== ========== ========== ========== ==========
<FN>
<F*>This fund was formerly known as the International Equity Fund.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 78
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------
1997 1996 1995 1997<F**>
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Operations:
Net investment expense $ (40,537) $ (33,173) $ (31,649) $ (2,283)
Net realized gain on investments 451,508 1,223,053 331,442 150,417
Net unrealized gain (loss) on investments 945,457 (440,160) 388,731 (133,375)
---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 1,356,428 749,720 688,524 14,759
Net deposits into (deductions from)
Separate Account 793,111 (860,933) 229,832 1,129,095
---------- ---------- ---------- ----------
Increase (decrease) in net assets 2,149,539 (111,213) 918,356 1,143,854
Net assets, beginning of period 4,085,177 4,196,390 3,278,034 0
---------- ---------- ---------- ----------
Net assets, end of period $6,234,716 $4,085,177 $4,196,390 $1,143,854
========== ========== ========== ==========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**>The Small-Cap Equity Fund began operations on May 1, 1997.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 79
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
------------------------------------- ------------------------------------
1997 1996 1995 1997 1996 1995
----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (expense) $ 75,885 $ (52,988) $ 63,048 $ (51,298) $ (63,148) $ (25,138)
Net realized gain on investments 1,249,329 395,572 193,153 802,208 800,856 176,048
Net unrealized gain on investments 1,801,581 660,736 850,722 2,688,958 537,783 1,450,103
----------- ----------- ---------- ----------- ----------- ----------
Net increase in net assets
resulting from operations 3,126,795 1,003,320 1,106,923 3,439,868 1,275,491 1,601,013
Net deposits into Separate Account 3,516,214 3,869,404 2,068,778 5,418,111 4,760,220 1,991,002
----------- ----------- ---------- ----------- ----------- ----------
Increase in net assets 6,643,009 4,872,724 3,175,701 8,857,979 6,035,711 3,592,015
Net assets, beginning of period 10,352,808 5,480,084 2,304,383 13,370,612 7,334,901 3,742,886
----------- ----------- ---------- ----------- ----------- ----------
Net assets, end of period $16,995,817 $10,352,808 $5,480,084 $22,228,591 $13,370,612 $7,334,901
=========== =========== ========== =========== =========== ==========
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 80
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION<F*>
----------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (expense) $ 41,778 $ 4,803 $ (14,017) $ 5,627 $ 1,282 $ (52)
Net realized gain on investments 466,320 88,122 27,869 33,746 3,187 13
Net unrealized gain on investments 62,543 428,439 247,043 34,466 18,014 1,779
---------- ---------- ---------- -------- -------- -------
Net increase in net assets
resulting from operations 570,641 521,364 260,895 73,839 22,483 1,740
Net deposits into Separate Account 2,154,913 1,491,289 1,053,659 227,154 202,863 49,378
---------- ---------- ---------- -------- -------- -------
Increase in net assets 2,725,554 2,012,653 1,314,554 300,993 225,346 51,118
Net assets, beginning of period 5,445,930 3,433,277 2,118,723 276,464 51,118 0
---------- ---------- ---------- -------- -------- -------
Net assets, end of period $8,171,484 $5,445,930 $3,433,277 $577,457 $276,464 $51,118
========== ========== ========== ======== ======== =======
<FN>
<F*>The Asset Manager Fund began operations on July 19, 1995.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 81
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F*>
---------------------------------- ---------------------------------
1997 1996 1995<F**> 1997 1996 1995<F**>
---------- ---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (expense) $ 77,610 $ 22,992 $ (253) $ 1,531 $ 285 $ 18
Net realized gain (loss) on investments 29,038 5,419 1,132 3,210 2,955 (5)
Net unrealized gain (loss) on investments 163,711 54,725 2,337 (14,106) 2,976 370
---------- ---------- -------- -------- -------- ------
Net increase (decrease) in net assets
resulting from operations 270,359 83,136 3,216 (9,365) 6,216 383
Net deposits into Separate Account 711,529 904,946 199,733 92,851 170,306 9,414
---------- ---------- -------- -------- -------- ------
Increase in net assets 981,888 988,082 202,949 83,486 176,522 9,797
Net assets, beginning of period 1,191,031 202,949 0 186,319 9,797 0
---------- ---------- -------- -------- -------- ------
Net assets, end of period $2,172,919 $1,191,031 $202,949 $269,805 $186,319 $9,797
========== ========== ======== ======== ======== ======
<FN>
<F*> This fund was formerly known as the Gold & Natural Resources Fund.
<F**>The High Income Fund and the Worldwide Hard Assets Fund began operations on May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 82
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1997
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*> FUND DIVISION<F*>
----------------- ----------------- ----------------- -----------------
1997 1997 1997 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Operations:
Net investment income (expense) $ (1,979) $ 929 $ (1,164) $ (1,145)
Net realized gain on investments 5,224 705 2,158 78
Net unrealized gain (loss) on investments 1,553 27,482 23,627 (57,317)
---------- ---------- ---------- --------
Net increase (decrease) in net assets
resulting from operations 4,798 29,116 24,621 (58,384)
Net deposits into Separate Account 2,534,482 1,125,291 1,320,804 842,227
---------- ---------- ---------- --------
Increase in net assets 2,539,280 1,154,407 1,345,425 783,843
Net assets, beginning of period 0 0 0 0
---------- ---------- ---------- --------
Net assets, end of period $2,539,280 $1,154,407 $1,345,425 $783,843
========== ========== ========== ========
<FN>
<F*>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and Non-US Fund began operations on January 2,
1997.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 83
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<CAPTION>
No. of Shares Market Value
------------- ------------
<S> <C> <C>
S & P 500 Index Fund
General American Capital Company<F*> 522,436 $20,581,893
Money Market Fund
General American Capital Company<F*> 471,869 8,600,564
Bond Index Fund
General American Capital Company<F*> 148,761 3,450,248
Managed Equity Fund
General American Capital Company<F*> 135,951 4,241,762
Asset Allocation Fund
General American Capital Company<F*> 329,020 10,482,605
International Index Fund<F**>
General American Capital Company<F*> 474,049 7,866,879
Mid-Cap Equity Fund<F***>
General American Capital Company<F*> 282,331 6,232,329
Small-Cap Equity Fund
General American Capital Company<F*> 23,695 1,143,813
Equity-Income Fund
Variable Insurance Products Fund 700,210 17,001,106
Growth Fund
Variable Insurance Products Fund 599,398 22,237,647
Overseas Fund
Variable Insurance Products Fund 425,780 8,174,972
Asset Manager Fund
Variable Insurance Products Fund II 32,084 577,825
High Income Fund
Variable Insurance Products Fund 160,163 2,175,014
Worldwide Hard Assets Fund<F****>
Van Eck Worldwide Insurance Trust 17,172 269,764
Multi-Style Equity Fund
Russell Insurance Funds 198,618 2,538,339
Core Bond Fund
Russell Insurance Funds 110,396 1,153,638
Aggressive Equity Fund
Russell Insurance Funds 99,947 1,344,291
Non-US Fund
Russell Insurance Funds 78,061 782,951
<FN>
<F*> These funds use consent dividending. See Note 2C.
<F**> This fund was formerly known as the International Equity Fund.
<F***> This fund was formerly known as the Special Equity Fund.
<F****>This fund was formerly known as the Gold & Natural Resources Fund.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 84
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1 - Organization
General American Separate Account Eleven (the Separate Account) commenced
operations on September 15, 1987 and is registered under the Investment
Company Act of 1940 (1940 Act) as a unit investment trust. The Separate
Account offers four products: Variable Universal Life (VUL-95), Variable
General Select Plus (VGSP), Variable Universal Life (VUL-100), and Russell
Variable Universal Life (Russell VUL) that receive and invest net premiums
for flexible premium variable life insurance policies that are issued by
General American Life Insurance Company (General American). The Separate
Account is divided into eighteen Divisions. Each Division invests exclusively
in shares of a single Fund of either General American Capital Company,
Variable Insurance Products Fund, Variable Insurance Products Fund II, Van
Eck Worldwide Insurance Trust or Russell Insurance Funds which are open-end,
diversified management companies. The Funds of the General American Capital
Company, sponsored by General American, are the S & P 500 Index (formerly
Equity Index), Money Market, Bond Index, Managed Equity, Asset Allocation,
International Index (formerly International Equity), Mid-Cap Equity (formerly
Special Equity), and the Small-Cap Equity Fund Divisions. The Funds of the
Variable Insurance Products Fund, managed by Fidelity Management & Research
Company, are the Equity-Income, Growth, Overseas, and the High Income Fund
Divisions. The Funds of the Variable Insurance Products Fund II, managed by
Fidelity Management and Research Company is the Asset Manager Fund. The Fund
of the Van Eck Worldwide Insurance Trust, managed by Van Eck Associates
Corporation, is the Worldwide Hard Assets Fund, formerly known as the Gold
and Natural Resources Fund. The Funds of the Russell Variable Insurance
Product, managed by Frank Russell Investment Management Company are the
Multi-style Equity, Core Bond, Aggressive Equity, and Non-US Fund Divisions.
Policyholders have the option of directing their premium payments into one or
all of the Funds as well as into the general account of General American,
which is not generally subject to regulation under the Securities Act of 1933
or the 1940 Act.
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Separate Account in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A. Investments
The Separate Accounts' investments in the eighteen Funds are valued
daily based on the net asset values of the respective Fund shares held
as reported to General American by General American Capital Company,
Variable Insurance Products Fund, Variable Insurance Products Fund II,
Van Eck Worldwide Insurance Trust, and Russell Insurance Funds. The
specific identification method is used in determining the cost of
shares sold on withdrawals by the Separate Account. Share transactions
are recorded on the trade date, which is the same as the settlement
date.
B. Federal Income Taxes
Under current federal income tax law, capital gains from sales of
investments of the Separate Account are not taxable. Therefore, no
federal income tax expense has been provided.
C. Distribution of Income and Realized Capital Gains
General American Capital Company follows the federal income tax
practice known as consent dividending, whereby substantially all of its
net investment income and realized gains are deemed to be passed
through to the Separate Account. As a result, General American Capital
Company does not pay any dividends or capital gain distributions.
During December of each year, accumulated investment income and capital
gains of the underlying Capital Company Fund are allocated to the
Separate Account by increasing the cost basis and recognizing a capital
gain in the Separate Account. The Variable Insurance Products Fund,
Variable Insurance Products Fund II, Van Eck Worldwide Insurance Trust
and Russell Insurance Funds intend to pay out all of their net
investment income and net realized capital gains each year. Dividends
from the funds are distributed at least annually on a per share basis
and are recorded on the ex dividend date. Normally, net realized
capital gains, if any, are distributed each year for each fund. Such
income and capital gain distributions are automatically reinvested in
additional shares of the funds.
<PAGE> 85
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increase
and decrease in net assets from operations during the period. Actual
results could differ from those estimates.
Note 3 - Policy Charges
Charges are deducted from premiums and paid to General American for providing
the insurance benefits set forth in the contracts and any additional benefits
added by rider, administering the policies, reimbursement of expenses
incurred in distributing the policies, and assuming certain risks in
connection with the policies.
Prior to the allocation of net premiums among General American's general
account and the Fund Divisions of the Separate Account, premium payments are
reduced by premium expense charges, which consist of a sales charge and a
charge for premium taxes. The premium payment, less the premium expense
charge, equals the net premium.
Sales Charge: A sales charge equal to 6% is deducted from each VUL-95
-------------
premium paid. A sales charge of 5% in years one through ten and 2.25%
thereafter is deducted from each VGSP premium paid. A maximum sales
charge of 5% in years one through ten and a maximum 2.25% thereafter
based on initial deposit is deducted from each Russell VUL premium
paid. This charge is deducted to partially reimburse General American
for expenses incurred in distributing the policy and any additional
benefits provided by rider. No sales charge is deducted from VUL-100
premiums.
Premium Taxes: Various state and political subdivisions impose a tax
--------------
on premiums received by insurance companies. Premium taxes vary from
state to state. A deduction of 2% of each VUL-95 premium, 2.5% of each
VGSP premium, 2.10% of each VUL-100 premium, and 2.5% of each Russell
VUL premium is made from each premium payment for these taxes. In
addition, a 1.25% deduction is taken from VUL-100 premiums to cover the
company's Federal income tax costs attributable to the amount of
premium received.
Charges are deducted monthly from the cash value of each policy to compensate
General American for (a) certain administrative costs; (b) insurance
underwriting and acquisition expenses in connection with issuing a policy;
(c) the cost of insurance, and (d) the cost of optional benefits added by
rider.
Administrative Charge: General American has responsibility for the
----------------------
administration of the policies and the Separate Account. As
reimbursement for administrative expenses related to the maintenance of
each policy and the Separate Account, General American assesses a
monthly administrative charge against each policy. This charge is $10
per month for a standard policy and $12 per month for a pension policy
during the first 12 policy months and $4 (standard) and $6 (pension)
per month for all policy months beyond the 12th for VUL-95 contracts.
The charge is $4 per month for VGSP and Russell VUL contracts. The
charge is $13 per month during the first 12 policy months and $6 per
month thereafter for VUL-100 contracts.
Insurance Underwriting and Acquisition Expense Charge: An additional
------------------------------------------------------
administrative charge is deducted from the policy cash value for VUL-95
as part of the monthly deduction during the first 12 policy months and
for the first 12 policy months following an increase in the face
amount. The charge is $0.08 per month multiplied by the face amount
divided by 1,000. For VUL-100, the charge during the first 12 policy
months is $0.16 per month multiplied by the face amount divided by
1,000, and in all policy years thereafter, the charge is $0.01 per
month multiplied by the face amount divided by 1,000.
<PAGE> 86
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Cost of Insurance: The cost of insurance is deducted on each monthly
------------------
anniversary date for the following policy month. Because the cost of
insurance depends upon a number of variables, the cost varies for each
policy month. The cost of insurance is determined separately for the
initial face amount and for any subsequent increases in face amount.
General American determines the monthly cost of insurance charge by
multiplying the applicable cost of insurance rate or rates by the net
amount at risk for each policy month.
Optional Rider Benefits Charge: This monthly deduction includes
-------------------------------
charges for any additional benefits provided by rider.
Contingent Deferred Sales Charge: During the first ten policy years
---------------------------------
for VUL-95, VGSP, and Russell VUL, and the first fifteen years for VUL-
100, General American also assesses a charge upon surrender or lapse of
a Policy, a requested decrease in face amount, or a partial withdrawal
that causes the face amount to decrease. The amount of the charge
assessed depends on a number of factors, including whether the event is
a full surrender or lapse or only a decrease in face amount, the amount
of premiums received to date by General American, and the policy year
in which the surrender or other event takes place.
Mortality and Expense Charge: In addition to the above charges, a daily
- -----------------------------
charge is made at the separate account level for the mortality and expense
risks assumed by General American. General American deducts a daily charge
from the Separate Account at the rate of .002319% for VUL-95, .0019111% for
VGSP, .002455% for VUL-100, and .001366% for Russell VUL of the net assets of
each division of the Separate Account, which equals an annual rate of .85%,
.70%, .90%, and .50% for VUL-95, VGSP, VUL-100, and Russell VUL,
respectively. VUL-95, VGSP, VUL-100, and Russell VUL mortality and expense
charges for 1997 were $398,648, $160,175, $174,234, and $5,685,
respectively. The mortality risk assumed by General American is the risk that
those insured may die sooner than anticipated and therefore, that General
American will pay an aggregate amount of death benefits greater than
anticipated. The expense risk assumed is that expenses incurred in issuing
and administering the policy will exceed the amounts realized from the
administrative charges assessed against the policy.
NOTE 4 - INVESTMENT OBJECTIVES, MANAGER CHANGES AND NEW DIVISIONS
Effective January 1, 1997, the International Equity Fund became the
International Index Fund. The investment objective of the International Index
Fund is to obtain investment results that parallel the price and yield
performance of publicly-traded common stocks in the Morgan Stanley Capital
International Europe, Australia, and Far East Index ("EAFE Index"). The
portfolio manager of the International Index Fund is Conning Asset Management
Company and the management fee for the fund is .50% on the first $10 million
in assets, .40% on the balance over $10 million and less than $20 million and
.30% on any balance in excess of $20 million.
Effective January 1, 1997, the Special Equity Fund became the Mid-Cap Equity
Fund. The investment objective of the Mid-Cap Equity Fund is to seek
sustained growth of capital by investing primarily in common stocks of United
States-bases publicly traded companies with "medium market capitalization".
"Medium market capitalization companies" are those whose market
capitalization falls within the range of the S&P MidCap 400 at the time of
the Fund's investment. The portfolio manager of the Mid-Cap Equity Fund is
Conning Asset Management Company and the total management fee rate remained
unchanged from that of the Special Equity Fund.
On March 1, 1997, Conning Asset Management Company became the manager of the
Managed Equity Fund. The management fee is .40% on the first $10 million in
assets, .30% on the balance over $10 million and less than $30 million, and
.25% on the balance in excess of $30 million.
<PAGE> 87
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
On January 2, 1997, four new divisions and a new product -Russell VUL- were
added to Separate Account Eleven. The four divisions were the Multi-Style
Equity, Core Bond, Aggressive Equity and Non-US. The underlying funds in
these divisions are offered by Russell Insurance Funds and managed by Frank
Russell Company. The investment objectives of each of these new divisions are
as follows:
Multi-Style Equity Fund - To provide income and capital growth by investing
- -----------------------
principally in equity securities.
Core Bond Fund - To provide effective diversification against equities and a
- --------------
stable level of cash flow by investing in fixed income securities.
Aggressive Equity Fund - To maximize total return through capital
- ----------------------
appreciation and by assuming a higher level of volatility than is ordinarily
expected from the Multi-Style Equity Fund, while still investing in equity
securities.
Non-US Fund - To provide favorable total return and additional
- -----------
diversification for United States investors by investing primarily in equity
and fixed income securities of non-US companies and securities issued by
non-United States governments.
The underlying products currently offered by these divisions are Russell VUL
and VGSP.
On May 1, 1997, the Small Cap Equity division was added to Separate Account
Eleven. The underlying fund in this division is offered by General American
Capital Company and is managed by Conning Asset Management Company. The
investment objective of the fund is to provide a rate of return that
corresponds to the performance of the common stock of small companies, while
incurring a level of risk that is generally equal to the risks associated
with small company common stock. The Fund attempts to duplicate the
performance of the smallest 20% of companies based on capitalization size,
that are based in the United States and listed on the New York Stock
Exchange.
The underlying products currently offered by this division are VUL-95, VGSP,
and VUL-100.
<PAGE> 88
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 5 - PURCHASES AND SALES
During the year ended December 31, 1997, purchases including net realized
gain and income from distribution and proceeds from sales of General American
Capital Company shares were as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed Asset International Mid-Cap Small-Cap
Index Market Index Equity Allocation Index Equity Equity
Fund Fund Fund Fund Fund Fund Fund Fund
---------- ----------- ---------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases $8,442,192 $18,247,884 $1,749,901 $1,578,051 $2,343,633 $1,765,214 $2,156,245 $1,293,907
========== =========== ========== ========== ========== ========== ========== ==========
Sales $5,448,171 $17,983,425 $5,140,723 $ 590,072 $1,218,119 $ 628,010 $1,147,830 $ 17,782
========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund
Shares were as follows:
<TABLE>
<CAPTION>
Equity-Income Growth Overseas High Income
Fund Fund Fund Fund
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Purchases $5,671,668 $6,780,325 $3,016,982 $1,043,519
========== ========== ========== ==========
Sales $1,100,161 $ 960,461 $ 418,954 $ 240,128
========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund II
shares were as follows:
<TABLE>
<CAPTION>
Asset Manager
Fund
-------------
<S> <C>
Purchases $367,321
========
Sales $111,483
========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Van Eck Worldwide Insurance Trust
shares were as follows:
<TABLE>
<CAPTION>
Worldwide Hard
Assets Fund
--------------
<S> <C>
Purchases $152,061
========
Sales $ 53,087
========
</TABLE>
During the year ended December 31, 1997, purchases (including dividend
reinvestment) and proceeds from sales of Russell Insurance Funds shares were as
follows:
<TABLE>
<CAPTION>
Multi-Style Core Bond Aggressive Non-US
Equity Fund Fund Equity Fund Fund
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Purchases $2,574,829 $1,160,983 $1,338,577 $863,517
========== ========== ========== ========
Sales $ 43,266 $ 35,533 $ 20,072 $ 23,327
========== ========== ========== ========
</TABLE>
<PAGE> 89
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
--------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 70,404 56,960 78,391 98,719 52,946 206,798
Withdrawals (29,686) (32,408) (101,054) (110,821) (79,319) (215,226)
Outstanding units, beginning of year 195,587 171,035 193,698 58,805 85,178 93,606
-------- ------- -------- -------- ---------- --------
Outstanding units, end of year 236,305 195,587 171,035 46,703 58,805 85,178
======== ======= ======== ======== ========== ========
Variable General Select Plus:
Deposits 146,632 376,931 30,100 942,448 1,489,642 344,162
Withdrawals (305,772) (16,019) (15,451) (900,950) (1,173,354) (215,211)
Outstanding units, beginning of year 407,634 46,722 32,073 494,355 178,067 49,116
-------- ------- -------- -------- ---------- --------
Outstanding units, end of year 248,494 407,634 46,722 535,853 494,355 178,067
======== ======= ======== ======== ========== ========
Variable Universal Life-100:<F*>
Deposits 212,106 151,173 14,240 738,912 729,350 214,797
Withdrawals (41,462) (42,505) (687) (707,676) (698,266) (110,989)
Outstanding units, beginning of period 122,221 13,553 0 134,892 103,808 0
-------- ------- -------- -------- ---------- --------
Outstanding units, end of period 292,865 122,221 13,553 166,128 134,892 103,808
======== ======= ======== ======== ========== ========
Russell Variable Universal Life:<F**> 435,785
Deposits (427,238)
Withdrawals 0
--------
Outstanding units, beginning of period
Outstanding units, end of period 8,547
========
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**>The Russell Variable Universal Life product was introduced in 1997, and
the first deposit was received on May 6, 1997.
(continued)
</TABLE>
$" "
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years ended
December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
--------------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
-------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 45,996 20,690 28,341 20,213 22,639 37,042
Withdrawals (19,985) (19,502) (102,229) (19,170) (23,620) (68,803)
Outstanding units, beginning of year 71,443 70,255 144,143 91,667 92,648 124,409
-------- ------- -------- ------- ------- -------
Outstanding units, end of year 97,454 71,443 70,255 92,710 91,667 92,648
======== ======= ======== ======= ======= =======
Variable General Select Plus:
Deposits 26,599 422,790 5,765 22,411 20,875 5,835
Withdrawals (398,540) (6,268) (1,249) (10,526) (1,816) (595)
Outstanding units, beginning of year 422,341 5,819 1,303 25,596 6,537 1,297
-------- ------- -------- ------- ------- -------
Outstanding units, end of year 50,400 422,341 5,819 37,481 25,596 6,537
======== ======= ======== ======= ======= =======
Variable Universal Life-100:<F*>
Deposits 38,781 31,945 1,670 38,918 15,297 1,823
Withdrawals (8,471) (8,214) (75) (8,793) (2,675) (168)
Outstanding units, beginning of period 25,326 1,595 0 14,277 1,655 0
-------- ------- -------- ------- ------- -------
Outstanding units, end of period 55,636 25,326 1,595 44,402 14,277 1,655
======== ======= ======== ======= ======= =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 90
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
------------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 58,255 67,461 80,183 56,157 60,637 74,018
Withdrawals (49,785) (33,247) (98,461) (45,488) (32,650) (28,390)
Outstanding units, beginning of year 274,368 240,154 258,432 164,557 136,570 90,942
------- ------- ------- ------- ------- -------
Outstanding units, end of year 282,838 274,368 240,154 175,226 164,557 136,570
======= ======= ======= ======= ======= =======
Variable General Select Plus:
Deposits 21,682 21,668 12,925 35,709 24,970 16,837
Withdrawals (10,372) (18,560) (31,947) (10,776) (12,229) (6,722)
Outstanding units, beginning of year 61,197 58,089 77,111 45,125 32,384 22,269
------- ------- ------- ------- ------- -------
Outstanding units, end of year 72,507 61,197 58,089 70,058 45,125 32,384
======= ======= ======= ======= ======= =======
Variable Universal Life-100:<F**>
Deposits 44,721 23,767 1,072 56,601 46,973 4,468
Withdrawals (11,617) (2,830) (39) (15,926) (7,916) (777)
Outstanding units, beginning of year 21,970 1,033 0 42,748 3,691 0
------- ------- ------- ------- ------- -------
Outstanding units, end of year 55,074 21,970 1,033 83,423 42,748 3,691
======= ======= ======= ======= ======= =======
General American Life Insurance Company
seed money:
Deposits 0 0 0 0 0 0
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of year 0 0 0 200,000 200,000 200,000
------- ------- ------- ------- ------- -------
Outstanding units, end of year 0 0 0 200,000 200,000 200,000
======= ======= ======= ======= ======= =======
<FN>
<F*> This fund was formerly known as the International Equity Fund.
<F**> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 91
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995, for the Mid-Cap Equity Fund
Division and the period ended December 31, 1997, for the Small-Cap Equity Fund
Division:
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
------------------------------- -------------------------------
1997 1996 1995 1997<F***>
------- -------- ------- ----------
<S> <C> <C> <C> <C>
Variable Universal Life - 95:
Deposits 50,013 67,217 94,909 35,503
Withdrawals (61,032) (50,100) (88,190) (326)
Outstanding units, beginning of period 185,140 168,023 161,304 0
------- ------- ------- ------
Outstanding units, end of period 174,121 185,140 168,023 35,177
======= ======= ======= ======
Variable General Select Plus:
Deposits 43,764 17,983 22,352 30,298
Withdrawals (14,054) (16,026) (12,685) (271)
Outstanding units, beginning of period 48,209 46,252 36,585 0
------- ------- ------- ------
Outstanding units, end of period 77,919 48,209 46,252 30,027
======= ======= ======= ======
Variable Universal Life - 100:<F**>
Deposits 36,664 35,395 4,498 23,110
Withdrawals (15,674) (6,929) (725) (540)
Outstanding units, beginning of period 32,239 3,773 0 0
------- ------- ------- ------
Outstanding units, end of period 53,229 32,239 3,773 22,570
======= ======= ======= ======
General American Life Insurance Company
seed money:
Deposits 0 0 0
Withdrawals 0 (100,000) 0
Outstanding units, beginning of year 0 100,000 100,000
------- ------- -------
Outstanding units, end of year 0 0 100,000
======= ======= =======
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F***> The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 92
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
------------------------------- -------------------------------
1997 1996 1995 1997 1996 1995
------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 73,369 100,383 143,543 110,237 141,831 181,296
Withdrawals (68,932) (61,252) (48,670) (69,361) (101,041) (80,832)
Outstanding units, beginning of year 287,907 248,776 153,903 367,037 326,247 225,783
------- ------- ------- ------- -------- -------
Outstanding units, end of year 292,344 287,907 248,776 407,913 367,037 326,247
======= ======= ======= ======= ======== =======
Variable General Select Plus:
Deposits 107,293 95,653 78,040 151,169 136,928 90,761
Withdrawals (41,943) (24,220) (34,513) (56,898) (38,737) (60,661)
Outstanding units, beginning of year 160,791 89,358 45,831 233,747 135,556 105,456
------- ------- ------- ------- -------- -------
Outstanding units, end of year 226,141 160,791 89,358 328,018 233,747 135,556
======= ======= ======= ======= ======== =======
Variable Universal Life-100:<F*>
Deposits 161,018 167,806 20,481 227,448 213,702 25,375
Withdrawals (42,604) (22,709) (1,718) (64,065) (38,214) (1,865)
Outstanding units, beginning of period 163,860 18,763 0 198,998 23,510 0
------- ------- ------- ------- -------- -------
Outstanding units, end of period 282,274 163,860 18,763 362,381 198,998 23,510
======= ======= ======= ======= ======== =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 93
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, 1996, and 1995, for the Overseas Fund Division
and for the years ended December 31, 1997, and 1996, and the period ended
December 31, 1995, for the Asset Manager Division:.
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995<F*>
------- ------- ------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 73,211 86,129 97,609 1,053 1,196 331
Withdrawals (33,419) (57,328) (42,775) (363) (80) (4)
Outstanding units, beginning of period 202,771 173,970 119,136 1,443 327 0
------- ------- ------- ------ ------ -----
Outstanding units, end of period 242,563 202,771 173,970 2,132 1,443 327
======= ======= ======= ====== ====== =====
Variable General Select Plus:
Deposits 78,015 59,185 46,058 4,792 4,133 1,534
Withdrawals (24,003) (18,099) (24,367) (1,323) (1,450) (6)
Outstanding units, beginning of period 114,696 73,610 51,919 4,211 1,528 0
------- ------- ------- ------ ------ -----
Outstanding units, end of period 168,708 114,696 73,610 7,680 4,211 1,528
======= ======= ======= ====== ====== =====
Variable Universal Life-100:<F**>
Deposits 61,939 59,253 9,829 19,775 17,799 3,044
Withdrawals (16,003) (12,929) (1,146) (6,893) (3,550) (100)
Outstanding units, beginning of period 55,007 8,683 0 17,193 2,944 0
------- ------- ------- ------ ------ -----
Outstanding units, end of period 100,943 55,007 8,683 30,075 17,193 2,944
======= ======= ======= ====== ====== =====
<FN>
<F*> The Asset Manager fund began operations on July 19, 1995.
<F**>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 94
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1997, and 1996, and the period ended December 31, 1995:
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
---------------------------------- ---------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
------- ------ -------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 8,197 18,576 6,217 5,256 6,777 135
Withdrawals (10,956) (3,225) (237) (857) (976) (9)
Outstanding units, beginning of period 21,331 5,980 0 5,927 126 0
------- ------ ----- ------ ------ ---
Outstanding units, end of period 18,572 21,331 5,980 10,326 5,927 126
======= ====== ===== ====== ====== ===
Variable General Select Plus:
Deposits 36,763 32,705 6,436 1,994 4,222 0
Withdrawals (8,788) (2,369) (115) (3,232) (92) 0
Outstanding units, beginning of period 36,657 6,321 0 4,130 0 0
------- ------ ----- ------ ------ ---
Outstanding units, end of period 64,632 36,657 6,321 2,892 4,130 0
======= ====== ===== ====== ====== ===
Variable Universal Life-100:<F***>
Deposits 39,145 41,415 6,662 7,159 6,746 890
Withdrawals (9,470) (8,355) (159) (2,531) (1,660) (31)
Outstanding units, beginning of period 39,563 6,503 0 5,945 859 0
------- ------ ----- ------ ------ ---
Outstanding units, end of period 69,238 39,563 6,503 10,573 5,945 859
======= ====== ===== ====== ====== ===
<FN>
<F*> The High Income Fund and Worldwide Hard Assets Fund began operations on May
24, and August 9, 1995, respectively.
<F**> This fund was formerly known as the Gold & Natural Resources Fund.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 95
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the period
ended December 31, 1997:
<TABLE>
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- -------------- -------------
1997<F*> 1997<F*> 1997<F*> 1997<F*>
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Variable General Select Plus:<F**>
Deposits 47,597 21,805 25,379 28,863
Withdrawals (667) (391) (279) (285)
Outstanding units, beginning of period 0 0 0 0
------- ------ ------ ------
Outstanding units, end of period 46,930 21,414 25,100 28,578
======= ====== ====== ======
Russell Variable Universal Life:<F***>
Deposits 153,054 86,149 75,650 50,101
Withdrawals (1,563) (2,024) (494) (1,018)
Outstanding units, beginning of period 0 0 0 0
------- ------ ------ ------
Outstanding units, end of period 151,491 84,125 75,156 49,083
======= ====== ====== ======
<FN>
<F*> The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
<F**> The Variable General Select Plus product was introduced in 1997, and the
first deposit was received on June 26, 1997.
<F***>The Russell Variable Universal Life product was introduced in 1997, and
the first deposit was received on June 6, 1997.
</TABLE>
<PAGE> 96
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT
Deposits into the Separate Account are used to purchase shares in the
Capital Company, Variable Insurance Products Funds, Variable Insurance
Products Fund II, Van Eck Worldwide Insurance Trust, or Russell Insurance
Funds. Net deposits represent the amounts available for investment in such
shares after deduction of sales charges, premium taxes, administrative
costs, insurance, underwriting and acquisition expense, cost of insurance,
and cost of optional benefits by rider. Realized and unrealized capital
gains (losses) have been excluded from net deposits into the Separate
Account because they have been included in increase (decrease) in net assets
resulting from operations in the Statements or Changes in Net Assets.
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
----------------------------------- ------------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,099,723 $1,063,999 $ 919,322 $ 1,794,475 $ 575,302 $ 2,001,421
Transfers between fund divisions and
General American 931,860 139,650 472,868 (1,471,521) (728,445) (1,597,558)
Surrenders and withdrawals (144,131) (82,719) (1,380,995) (20,934) (107,442) (346,828)
---------- ---------- ----------- ----------- --------- -----------
Total gross deposits, transfers between
fund divisions and surrenders 1,887,452 1,120,930 11,195 302,020 (260,585) 57,035
---------- ---------- ----------- ----------- --------- -----------
Deductions:
Premium load charges 84,994 84,266 82,459 371,169 46,330 194,508
Cost of insurance and administrative expenses 481,051 430,221 435,147 135,973 105,165 329,711
---------- ---------- ----------- ----------- --------- -----------
Total deductions 566,045 514,487 517,606 507,142 151,495 524,219
---------- ---------- ----------- ----------- --------- -----------
Net deposits into (withdrawals from)
Separate Account $1,321,407 $ 606,443 $ (506,411) $ (205,122) $(412,080) $ (467,184)
========== ========== =========== =========== ========= ===========
(continued)
</TABLE>
<PAGE> 97
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
---------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
--------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 312,433 $ 321,458 $ 421,967 $ 359,432 $ 395,649 $ 465,063
Transfers between fund divisions and
General American 504,481 20,627 62,346 53,604 (120,443) (121,086)
Surrenders and withdrawals (161,856) (171,083) (1,586,477) (162,045) (83,215) (647,675)
--------- --------- ----------- --------- --------- ---------
Total gross deposits, transfers between
fund divisions and surrenders 655,058 171,002 (1,102,164) 250,991 191,991 (303,698)
--------- --------- ----------- --------- --------- ---------
Deductions:
Premium load charges 24,355 25,685 32,747 27,564 31,741 38,137
Cost of insurance and administrative expenses 111,704 119,034 206,477 191,337 187,326 234,100
--------- --------- ----------- --------- --------- ---------
Total deductions 136,059 144,719 239,224 218,901 219,067 272,237
--------- --------- ----------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account $ 518,999 $ 26,283 $(1,341,388) $ 32,090 $ (27,076) $(575,935)
========= ========= =========== ========= ========= =========
(continued)
</TABLE>
<PAGE> 98
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
------------------------------------ ---------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,571,785 $1,478,021 $ 1,361,239 $ 674,809 $ 657,882 $635,309
Transfers between fund divisions and
General American (542,327) (26,293) (10,959) (244,489) 132,812 302,360
Surrenders and withdrawals (261,445) (117,682) (1,175,619) (27,295) (102,036) (45,598)
---------- ---------- ----------- --------- --------- --------
Total gross deposits, transfers between
fund divisions and surrenders 768,013 1,334,046 174,661 403,025 688,658 892,071
---------- ---------- ----------- --------- --------- --------
Deductions:
Premium load charges 115,555 113,909 115,321 53,326 52,174 54,639
Cost of insurance and administrative
expenses 472,278 467,810 559,425 206,172 215,112 211,351
---------- ---------- ----------- --------- --------- --------
Total deductions 587,833 581,719 674,746 259,498 267,286 265,990
---------- ---------- ----------- --------- --------- --------
Net deposits into (withdrawals from)
Separate Account $ 180,180 $ 752,327 $ (500,085) $ 143,527 $ 421,372 $626,081
========== ========== =========== ========= ========= ========
<FN>
<F*> This fund was formerly known as the International Equity Fund.
(continued)
</TABLE>
<PAGE> 99
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- --------------------------
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
----------------------------------- ---------------------
1997 1996 1995 1997<F***>
--------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Total gross deposits $ 731,205 $ 927,388 $ 713,819 $ 81,175
Transfers between fund divisions and
General American (545,250) (325,567) (319,339) 386,732
Surrenders and withdrawals (30,828) (74,752) (35,191) 0
Seed withdrawals <F**> 0 (1,494,837) 0 0
--------- ----------- --------- --------
Total gross deposits, transfers between
fund divisions and surrenders 155,127 (967,768) 359,289 467,907
--------- ----------- --------- --------
Deductions:
Premium load charges 55,258 73,857 57,765 6,341
Cost of insurance and administrative expenses 226,846 224,222 228,560 4,229
--------- ----------- --------- --------
Total deductions 282,104 298,079 286,325 10,570
--------- ----------- --------- --------
Net deposits into (withdrawals from)
Separate Account $(126,977) $(1,265,847) $ 72,964 $457,337
========= =========== ========= ========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**> Represents funds distributed to General American Life Insurance Company
in repayment of seed money used to start the Special Equity Fund in 1993.
<F***>The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 100
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,258,958 $1,399,658 $1,217,315 $1,700,056 $2,077,054 $1,771,614
Transfers between fund divisions and
General American (346,404) 10,733 565,593 124,428 (252,029) 348,401
Surrenders and withdrawals (243,196) (186,491) (37,075) (260,054) (286,745) (61,341)
---------- ---------- ---------- ---------- ---------- ----------
Total gross deposits, transfers between
fund divisions and surrenders 669,358 1,223,900 1,745,833 1,564,430 1,438,280 2,058,674
---------- ---------- ---------- ---------- ---------- ----------
Deductions:
Premium load charges 98,808 111,476 101,562 134,071 165,735 145,300
Cost of insurance and administrative expenses 470,011 473,165 406,596 606,328 610,838 588,684
---------- ---------- ---------- ---------- ---------- ----------
Total deductions 568,819 584,641 508,158 740,399 776,573 733,984
---------- ---------- ---------- ---------- ---------- ----------
Net deposits into Separate Account $ 100,539 $ 639,259 $1,237,675 $ 824,031 $ 661,707 $1,324,690
========== ========== ========== ========== ========== ==========
(continued)
</TABLE>
<PAGE> 101
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
---------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995<F*>
---------- ---------- ---------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 927,173 $1,128,054 $ 978,388 $ 9,236 $ 3,210 $ 24
Transfers between fund divisions and
General American 262,454 (173,088) 156,839 3,098 10,046 3,317
Surrenders and withdrawals (121,639) (163,405) (33,911) 0 0 0
---------- ---------- ---------- ------- ------- ------
Total gross deposits, transfers between
fund divisions and surrenders 1,067,988 791,561 1,101,316 12,334 13,256 3,341
---------- ---------- ---------- ------- ------- ------
Deductions:
Premium load charges 71,458 89,820 79,076 706 248 3
Cost of insurance and administrative expenses 302,840 289,700 317,551 1,874 896 39
---------- ---------- ---------- ------- ------- ------
Total deductions 374,298 379,520 396,627 2,580 1,144 42
---------- ---------- ---------- ------- ------- ------
Net deposits into Separate Account $ 693,690 $ 412,041 $ 704,689 $ 9,754 $12,112 $3,299
========== ========== ========== ======= ======= ======
<FN>
<F*>The Asset Manager Fund began operations on July 19, 1995.
(continued)
</TABLE>
<PAGE> 102
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-95:
- ---------------------------
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
--------------------------------- --------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 61,425 $ 47,325 $ 6,373 $29,642 $ 7,990 $1,007
Transfers between fund divisions and
General American (76,243) 146,648 59,489 31,281 63,119 387
-------- -------- ------- ------- ------- ------
Total gross deposits, transfers between
fund divisions and surrenders (14,818) 193,973 65,862 60,923 71,109 1,394
-------- -------- ------- ------- ------- ------
Deductions:
Premium load charges 4,910 3,747 499 2,223 595 81
Cost of insurance and administrative expenses 19,821 16,948 2,512 5,330 3,272 87
-------- -------- ------- ------- ------- ------
Total deductions 24,731 20,695 3,011 7,553 3,867 168
-------- -------- ------- ------- ------- ------
Net deposits into (withdrawals from)
Separate Account $(39,549) $173,278 $62,851 $53,370 $67,242 $1,226
======== ======== ======= ======= ======= ======
<FN>
<F*> The High Income Fund and Worldwide Hard Assets fund began operations on May
24, and August 9, 1995, respectively.
<F**>This fund was formerly known as the Gold & Natural Resources Fund.
(continued)
</TABLE>
<PAGE> 103
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
------------------------------------ --------------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 1,229,167 $ 475,955 $ 47,504 $11,949,827 $ 18,203,638 $ 3,333,097
Transfers between fund divisions
and General American 1,639,191 5,512,487 182,278 (6,333,824) (13,115,248) (1,350,435)
Surrenders and withdrawals (5,100,149) (28,210) (15,259) (4,042,319) (15,934) (10,440)
----------- ---------- -------- ----------- ------------ -----------
Total gross deposits, transfers between
fund divisions and surrenders (2,231,791) 5,960,232 214,523 1,573,684 5,072,456 1,972,222
----------- ---------- -------- ----------- ------------ -----------
Deductions:
Premium load charges 88,924 35,750 11,884 870,893 1,315,430 232,745
Cost of insurance and administrative expenses 158,092 63,207 21,050 158,166 126,052 88,973
----------- ---------- -------- ----------- ------------ -----------
Total deductions 247,016 98,957 32,934 1,029,059 1,441,482 321,718
----------- ---------- -------- ----------- ------------ -----------
Net deposits into (withdrawals from)
Separate Account $(2,478,807) $5,861,275 $181,589 $ 544,625 $ 3,630,974 $ 1,650,504
=========== ========== ======== =========== ============ ===========
(continued)
</TABLE>
<PAGE> 104
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------ --------------------------------
1997 1996 1995 1997 1996 1995
----------- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 170,971 $ 68,383 $ 9,129 $225,421 $131,764 $ 9,302
Transfers between fund divisions
and General American 109,381 4,780,139 57,441 49,038 170,404 60,563
Surrenders and withdrawals (4,675,478) (5,060) (12,416) (28,866) 0 0
----------- ---------- -------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders (4,395,126) 4,843,462 54,154 245,593 302,168 69,865
----------- ---------- -------- -------- -------- -------
Deductions:
Premium load charges 12,639 5,137 614 16,872 9,560 645
Cost of insurance and administrative expenses 24,838 16,027 1,862 24,211 11,739 1,602
----------- ---------- -------- -------- -------- -------
Total deductions 37,477 21,164 2,476 41,083 21,299 2,247
----------- ---------- -------- -------- -------- -------
Net deposits into (withdrawals from)
Separate Account $(4,432,603) $4,822,298 $ 51,678 $204,510 $280,869 $67,618
=========== ========== ======== ======== ======== =======
(continued)
</TABLE>
<PAGE> 105
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F*>
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $225,188 $170,662 (34,323) $273,454 $181,044 $ 76,251
Transfers between fund divisions
and General American 92,485 (27,308) (131,408) 190,371 32,353 76,707
Surrenders and withdrawals (48,400) (26,276) (10,179) (47,175) (10,048) (4,465)
-------- -------- --------- -------- -------- --------
Total gross deposits, transfers between
fund divisions and surrenders 269,273 117,078 (175,910) 416,650 203,349 148,493
-------- -------- --------- -------- -------- --------
Deductions:
Premium load charges 17,168 12,611 6,512 19,728 13,690 7,697
Cost of insurance and administrative expenses 67,268 52,342 39,594 37,091 23,940 16,684
-------- -------- --------- -------- -------- --------
Total deductions 84,436 64,953 46,106 56,819 37,630 24,381
-------- -------- --------- -------- -------- --------
Net deposits into (withdrawals from)
Separate Account $184,837 $ 52,125 $(222,016) $359,831 $165,719 $124,112
======== ======== ========= ======== ======== ========
<FN>
<F*>This fund was formerly known as the International Equity Fund.
(continued)
</TABLE>
<PAGE> 106
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F*> FUND DIVISION
-------------------------------- ----------------
1997 1996 1995 1997<F**>
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Total gross deposits $376,253 $191,049 $ 81,787 $ 59,270
Transfers between fund divisions
and General American 301,956 (58,467) 76,580 326,392
Surrenders and withdrawals (53,267) (52,717) (11,584) 0
-------- -------- -------- --------
Total gross deposits, transfers between
fund divisions and surrenders 624,942 79,865 146,783 385,662
-------- -------- -------- --------
Deductions:
Premium load charges 29,256 13,676 12,214 4,711
Cost of insurance and administrative expenses 40,346 26,565 21,651 3,518
-------- -------- -------- --------
Total deductions 69,602 40,241 33,865 8,229
-------- -------- -------- --------
Net deposits into Separate Account $555,340 $ 39,624 $112,918 $377,433
======== ======== ======== ========
<FN>
<F*> This fund was formerly known as the Special Equity Fund.
<F**>The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 107
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,043,306 $ 673,157 $285,714 $1,354,928 $ 899,999 $ 392,035
Transfers between fund divisions and
General American 658,129 638,476 446,973 957,813 888,367 225,243
Surrenders and withdrawals (148,279) (10,403) (62,763) (268,257) (48,837) (161,933)
---------- ---------- -------- ---------- ---------- ---------
Total gross deposits, transfers between
fund divisions and surrenders 1,553,156 1,301,230 669,924 2,044,484 1,739,529 455,345
---------- ---------- -------- ---------- ---------- ---------
Deductions:
Premium load charges 78,543 53,024 20,534 101,854 69,694 34,454
Cost of insurance and administrative expenses 163,469 112,967 58,881 206,497 136,072 82,849
---------- ---------- -------- ---------- ---------- ---------
Total deductions 242,012 165,991 79,415 308,351 205,766 117,303
---------- ---------- -------- ---------- ---------- ---------
Net deposits into Separate Account $1,311,144 $1,135,239 $590,509 $1,736,133 $1,533,763 $ 338,042
========== ========== ======== ========== ========== =========
(continued)
</TABLE>
<PAGE> 108
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995<F*>
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $763,625 $385,284 $154,142 $53,004 $ 8,754 $ 255
Transfers between fund divisions
and General American 265,722 271,694 200,230 3,027 26,425 15,583
Surrenders and withdrawals (56,432) (45,712) (55,346) (2,184) (2,067) 0
-------- -------- -------- ------- ------- -------
Total gross deposits, transfers between
fund divisions and surrenders 972,915 611,266 299,026 53,847 33,112 15,838
-------- -------- -------- ------- ------- -------
Deductions:
Premium load charges 57,640 29,621 13,147 3,927 670 10
Cost of insurance and administrative expenses 71,616 46,151 31,516 3,625 1,631 56
-------- -------- -------- ------- ------- -------
Total deductions 129,256 75,772 44,663 7,552 2,301 66
-------- -------- -------- ------- ------- -------
Net deposits into Separate Account $843,659 $535,494 $254,363 $46,295 $30,811 $15,772
======== ======== ======== ======= ======= =======
<FN>
<F*> The Asset Manager Fund began operations on July 19, 1995.
(continued)
</TABLE>
<PAGE> 109
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F**>
--------------------------------- ------------------------------------
1997 1996 1995<F*> 1997 1996 1995<F*>
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $201,994 $ 91,307 $ 603 $ 22,621 $ 1,869 $0
Transfers between fund divisions and
General American 207,353 278,491 68,178 1,823 45,785 0
Surrenders and withdrawals (6,433) 0 0 (36,871) 0 0
-------- -------- ------- -------- ------- --
Total gross deposits, transfers between
fund divisions and surrenders 402,914 369,798 68,781 (12,427) 47,654 0
-------- -------- ------- -------- ------- --
Deductions:
Premium load charges 15,004 7,156 37 1,715 175 0
Cost of insurance and administrative expenses 25,526 12,823 1,198 890 1,041 0
-------- -------- ------- -------- ------- --
Total deductions 40,530 19,979 1,235 2,605 1,216 0
-------- -------- ------- -------- ------- --
Net deposits into (withdrawals from)
Separate Account $362,384 $349,819 $67,546 $(15,032) $46,438 $0
======== ======== ======= ======== ======= ==
<FN>
<F*> The High Income Fund and Worldwide Hard Assets Fund began operations on May
24, and August 9, 1995, respectively.
<F**>This fund was formerly known as the Gold & Natural Resources Fund.
(continued)
</TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable General Select Plus:
- -----------------------------
<TABLE>
<CAPTION>
MULTI-STYLE AGGRESSIVE
EQUITY CORE BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- -------------
1997<F*> 1997<F*> 1997<F*> 1997<F*>
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total gross deposits $ 80,451 $ 17,978 $ 54,099 $ 42,059
Transfers between fund divisions and
General American 532,364 215,118 281,507 276,242
-------- -------- -------- --------
Total gross deposits and transfers
between fund divisions 612,815 233,096 335,606 318,301
-------- -------- -------- --------
Deductions:
Premium load charges 5,866 1,346 3,761 3,283
Cost of insurance and administrative expenses 8,425 2,474 3,632 3,028
-------- -------- -------- --------
Total deductions 14,291 3,820 7,393 6,311
-------- -------- -------- --------
Net deposits into Separate Account $598,524 $229,276 $328,213 $311,990
======== ======== ======== ========
<FN>
<F*>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
(continued)
</TABLE>
<PAGE> 110
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION FUND DIVISION
------------------------------------ ---------------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,995,433 $ 606,419 $ 16,519 $ 8,679,144 $ 7,989,872 $ 2,385,983
Transfers between fund divisions and
General American 2,177,143 1,285,071 172,340 (7,303,949) (6,898,282) (1,031,031)
Surrenders and withdrawals (68,513) (12,850) 0 (3,421) (242) 0
---------- ---------- -------- ----------- ----------- -----------
Total gross deposits, transfers between
fund divisions and surrenders 4,104,063 1,878,640 188,859 1,371,774 1,091,348 1,354,952
---------- ---------- -------- ----------- ----------- -----------
Deductions:
Premium load charges 66,092 20,294 458 286,729 250,193 73,630
Cost of insurance and administrative expenses 671,147 258,742 9,056 599,119 502,668 124,621
---------- ---------- -------- ----------- ----------- -----------
Total deductions 737,239 279,036 9,514 885,848 752,861 198,251
---------- ---------- -------- ----------- ----------- -----------
Net deposits into Separate Account $3,366,824 $1,599,604 $179,345 $ 485,926 $ 338,487 $ 1,156,701
========== ========== ======== =========== =========== ===========
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 111
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $184,259 $ 58,468 $ 2,634 $228,756 $102,809 $ 1,658
Transfers between fund divisions and
General American 265,500 257,285 16,903 432,012 120,203 21,497
Surrenders and withdrawals (4,282) (2,419) 0 (13,613) (413) 0
-------- -------- ------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders 445,477 313,334 19,537 647,155 222,599 23,155
-------- -------- ------- -------- -------- -------
Deductions:
Premium load charges 6,186 1,906 79 7,603 3,442 48
Cost of insurance and administrative expenses 57,817 31,767 862 96,349 36,945 2,150
-------- -------- ------- -------- -------- -------
Total deductions 64,003 33,673 941 103,952 40,387 2,198
-------- -------- ------- -------- -------- -------
Net deposits into Separate Account $381,474 $279,661 $18,596 $543,203 $182,212 $20,957
======== ======== ======= ======== ======== =======
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 112
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL INDEX
FUND DIVISION FUND DIVISION<F**>
-------------------------------- --------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $297,431 $ 91,429 $ 926 $380,598 $202,195 $20,494
Transfers between fund divisions and
General American 423,970 233,391 12,569 259,917 315,663 27,674
Surrenders and withdrawals (7,250) (906) 0 (12,338) (2,005) 0
-------- -------- ------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders 714,151 323,914 13,495 628,177 515,853 48,168
-------- -------- ------- -------- -------- -------
Deductions:
Premium load charges 10,273 3,162 30 12,990 6,724 656
Cost of insurance and administrative expenses 159,083 38,520 488 138,712 79,260 8,108
-------- -------- ------- -------- -------- -------
Total deductions 169,356 41,682 518 151,702 85,984 8,764
-------- -------- ------- -------- -------- -------
Net deposits into Separate Account $544,795 $282,232 $12,977 $476,475 $429,869 $39,404
======== ======== ======= ======== ======== =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**>This fund was formerly known as the International Equity Fund.
(continued)
</TABLE>
<PAGE> 113
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life-100:<F*>
- --------------------------------
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL-CAP EQUITY
FUND DIVISION<F**> FUND DIVISION
-------------------------------- ----------------
1997 1996 1995 1997<F***>
-------- -------- ------- ----------
<S> <C> <C> <C> <C>
Total gross deposits $405,467 $232,270 $18,525 $ 48,912
Transfers between fund divisions and
General American 129,102 228,709 34,407 254,044
Surrenders and withdrawals (15,375) (5,591) 0 0
-------- -------- ------- --------
Total gross deposits, transfers between
fund divisions and surrenders 519,194 455,388 52,932 302,956
-------- -------- ------- --------
Deductions:
Premium load charges 13,537 7,772 598 1,579
Cost of insurance and administrative expenses 140,909 82,326 8,384 7,052
-------- -------- ------- --------
Total deductions 154,446 90,098 8,982 8,631
-------- -------- ------- --------
Net deposits into Separate Account $364,748 $365,290 $43,950 $294,325
======== ======== ======= ========
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**> This fund was formerly known as the Special Equity Fund.
<F***>The Small-Cap Equity Fund began operations on May 1, 1997.
(continued)
</TABLE>
<PAGE> 114
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
EQUITY-INCOME GROWTH
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995
---------- ---------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,996,233 $ 914,095 $ 44,385 $2,402,233 $1,361,304 $ 50,500
Transfers between fund divisions and
General American 792,184 1,521,792 219,488 1,492,743 1,759,062 304,735
Surrenders and withdrawals (44,826) (7,812) 0 (114,282) (38,619) 0
---------- ---------- -------- ---------- ---------- --------
Total gross deposits, transfers between
fund divisions and surrenders 2,743,591 2,428,075 263,873 3,780,694 3,081,747 355,235
---------- ---------- -------- ---------- ---------- --------
Deductions:
Premium load charges 66,340 29,267 1,400 80,190 44,819 1,424
Cost of insurance and administrative
expenses 572,720 303,902 21,879 842,557 472,178 25,541
---------- ---------- -------- ---------- ---------- --------
Total deductions 639,060 333,169 23,279 922,747 516,997 26,965
---------- ---------- -------- ---------- ---------- --------
Net deposits into Separate Account $2,104,531 $2,094,906 $240,594 $2,857,947 $2,564,750 $328,270
========== ========== ======== ========== ========== ========
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 115
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
OVERSEAS ASSET MANAGER
FUND DIVISION FUND DIVISION
-------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995<F**>
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $508,810 $373,593 $ 25,338 $147,295 $ 50,502 $ 964
Transfers between fund divisions and
General American 313,710 307,488 82,196 109,004 137,452 30,404
Surrenders and withdrawals (22,505) (13,206) 0 (5,778) (2,165) 0
-------- -------- -------- -------- -------- -------
Total gross deposits, transfers between
fund divisions and surrenders 800,015 667,875 107,534 250,521 185,789 31,368
-------- -------- -------- -------- -------- -------
Deductions:
Premium load charges 17,197 11,611 762 4,955 1,674 28
Cost of insurance and administrative expenses 165,254 112,510 12,165 74,461 24,175 1,033
-------- -------- -------- -------- -------- -------
Total deductions 182,451 124,121 12,927 79,416 25,849 1,061
-------- -------- -------- -------- -------- -------
Net deposits into Separate Account $617,564 $543,754 $ 94,607 $171,105 $159,940 $30,307
======== ======== ======== ======== ======== =======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**>The Asset Manager Fund began operations on July 19, 1995.
(continued)
</TABLE>
<PAGE> 116
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Variable Universal Life - 100:<F*>
- ----------------------------------
<TABLE>
<CAPTION>
HIGH INCOME WORLDWIDE HARD ASSETS
FUND DIVISION FUND DIVISION<F***>
--------------------------------- --------------------------------
1997 1996 1995<F**> 1997 1996 1995<F**>
-------- -------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $300,761 $158,842 $ 5,221 $63,004 $22,003 $ 193
Transfers between fund divisions and
General American 224,109 297,097 65,982 18,216 53,910 8,300
Surrenders and withdrawals (20,348) (11,551) 0 (4,909) (5,154) 0
-------- -------- ------- ------- ------- ------
Total gross deposits, transfers between
fund divisions and surrenders 504,522 444,388 71,203 76,311 70,759 8,493
-------- -------- ------- ------- ------- ------
Deductions:
Premium load charges 10,110 4,982 174 2,147 712 8
Cost of insurance and administrative expenses 105,718 57,557 1,693 19,651 13,421 297
-------- -------- ------- ------- ------- ------
Total deductions 115,828 62,539 1,867 21,798 14,133 305
-------- -------- ------- ------- ------- ------
Net deposits into Separate Account $388,694 $381,849 $69,336 $54,513 $56,626 $8,188
======== ======== ======= ======= ======= ======
<FN>
<F*> The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
<F**> The High Income Fund and Gold & Natural Resources Fund began operations on
May 24, and August 9, 1995, respectively.
<F***>This fund was formerly known as the Gold & Natural Resources Fund.
(continued)
</TABLE>
<PAGE> 117
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Russell Variable Universal Life:<F*>
- ------------------------------------
<TABLE>
<CAPTION>
MONEY MULTI-STYLE CORE AGGRESSIVE
MARKET EQUITY BOND EQUITY NON-US
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------ ------------- ------------- -------------
1997<F**> 1997<F**> 1997<F**> 1997<F**> 1997<F**>
------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 4,627,386 $ 19,255 $ 3,472 $ 12,641 $ 8,990
Transfers between fund divisions and
General American (4,374,607) 1,937,967 914,278 987,308 532,277
Surrenders and withdrawals 0 (328) 0 (94) (137)
----------- ---------- -------- -------- --------
Total gross deposits, transfers between
fund divisions and surrenders 252,779 1,956,894 917,750 999,855 541,130
----------- ---------- -------- -------- --------
Deductions:
Premium load charges 72,762 1,369 0 822 548
Cost of insurance and administrative expenses 72,945 19,567 21,735 6,442 10,345
----------- ---------- -------- -------- --------
Total deductions 145,707 20,936 21,735 7,264 10,893
----------- ---------- -------- -------- --------
Net deposits into Separate Account $ 107,072 $1,935,958 $896,015 $992,591 $530,237
=========== ========== ======== ======== ========
<FN>
<F*> Russell Variable Universal Life product was introduced in 1997, and the
first deposit was received on June 6, 1997.
<F**>The Multi-Style Equity Fund, Core Bond Fund, Aggressive Equity Fund, and
Non-US Fund began operations on January 2, 1997.
</TABLE>
<PAGE> 118
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder of General American Life Insurance Company:
We have audited the accompanying consolidated balance sheets of General American
Life Insurance Company and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of operations, stockholder equity, and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General American
Life Insurance Company and subsidiaries as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1996 the
Company adopted Statement of Financial Accounting Standards No. 120, ACCOUNTING
AND REPORTING BY MUTUAL LIFE INSURANCE ENTERPRISES AND BY INSURANCE ENTERPRISES
FOR CERTAIN LONG-DURATION PARTICIPATING CONTRACTS.
St. Louis, Missouri
March 5, 1998
<PAGE> 119
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31
ASSETS 1997 1996
<S> <C> <C>
Fixed maturities:
Available-for-sale, at fair value $ 9,115,519 6,758,309
Mortgage loans, net 2,140,262 2,273,627
Real estate, net 140,145 203,767
Equity securities, at fair value 24,211 20,905
Policy loans 2,073,152 1,917,861
Short-term investments 190,374 55,594
Other invested assets 243,921 183,612
----------- ----------
Total investments 13,927,584 11,413,675
Cash and cash equivalents 358,879 142,724
Accrued investment income 168,592 148,419
Reinsurance recoverables and other contract deposits 4,117,958 3,264,644
Deferred policy acquisition costs 695,253 652,251
Other assets 488,582 442,139
Separate account assets 4,118,860 2,833,258
----------- ----------
Total assets $23,875,708 18,897,110
=========== ==========
LIABILITIES AND STOCKHOLDER EQUITY
Policy and contract liabilities:
Future policy benefits $ 4,933,787 4,238,033
Policyholder account balances:
Universal life 2,534,744 1,960,726
Annuities 4,161,946 4,321,241
Pension funds 4,732,400 2,778,834
Policy and contract claims 458,606 352,433
Dividends payable to policyholders 113,525 103,019
----------- ----------
Total policy and contract liabilities 16,935,008 13,754,286
Amounts payable to reinsurers 310,592 142,661
Long-term debt and notes payable 214,477 295,614
Other liabilities and accrued expenses 826,868 670,109
Deferred tax liability 89,046 43,277
Separate account liabilities 4,112,666 2,810,907
----------- ----------
Total liabilities 22,488,657 17,716,854
Minority interests 216,555 182,469
Stockholder equity:
Common stock, $1 par value, 5,000,000 shares
authorized, 3,000,000 shares issued and
outstanding in 1997 and 0 in 1996 3,000 -
Additional paid in capital 3,000 -
Retained earnings 1,055,233 963,230
Foreign currency translation adjustments,
net of taxes (19,481) (15,810)
Unrealized gain on investments, net of taxes 128,744 50,367
----------- ----------
Total stockholder equity 1,170,496 997,787
----------- ----------
Total liabilities and stockholder equity $23,875,708 18,897,110
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 120
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
REVENUES 1997 1996 1995
<S> <C> <C> <C>
Insurance premiums and other considerations $1,768,169 1,623,228 1,498,013
Net investment income 945,542 806,883 676,404
Ceded commissions 44,902 27,538 18,523
Other income 362,160 280,803 182,193
Net realized investment gains 28,538 24,531 280,756
--------- --------- ---------
Total revenues 3,149,311 2,762,983 2,655,889
BENEFITS AND EXPENSES
Policy benefits 1,528,333 1,379,803 1,150,188
Interest credited to policyholder account balances 345,937 262,532 192,522
--------- --------- ---------
Total policyholder benefits 1,874,270 1,642,335 1,342,710
Dividends to policyholders 182,146 171,904 264,658
Policy acquisition costs 168,045 143,094 138,811
Other insurance and operating expenses 739,814 642,636 522,986
--------- --------- ---------
Total benefits and expenses 2,964,275 2,599,969 2,269,165
--------- --------- ---------
Income before provision for income taxes
and minority interest 185,036 163,014 386,724
--------- --------- ---------
Income tax provision (benefit):
Current 65,778 45,902 115,769
Deferred (113) 13,992 29,411
--------- --------- ---------
Total provision for income taxes 65,665 59,894 145,180
--------- --------- ---------
Income before minority interest 119,371 103,120 241,544
Minority interest in earnings of consolidated subsidiaries (22,134) (19,888) (17,512)
--------- --------- ---------
Net income $ 97,237 83,232 224,032
========= ========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 121
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Foreign
currency Unrealized
translation gain (loss) on Total
Common Additional Retained adjustments, investments, stockholder
stock paid in capital earnings net of taxes net of taxes equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ - - 646,727 (20,175) (65,409) 561,143
Net income 224,032 224,032
Foreign currency translation adjustments 5,908 5,908
Change in unrealized gain (loss) on
investments, net of tax 162,864 162,864
Other, net 3,136 3,136
--------------------------------------------------------------------------------
Balance at December 31, 1995 - - 873,895 (14,267) 97,455 957,083
Net income 83,232 83,232
Foreign currency translation adjustments (1,543) (1,543)
Change in unrealized gain (loss) on
investments, net on tax (47,088) (47,088)
Other, net 6,103 6,103
--------------------------------------------------------------------------------
Balance at December 31, 1996 - - 963,230 (15,810) 50,367 997,787
Net income 97,237 97,237
Foreign currency translation adjustments (3,671) (3,671)
Change in unrealized gain (loss) on
investments, net of tax 78,377 78,377
Issuance of common stock 3,000 3,000 (6,000) -
Dividend to parent (4,480) (4,480)
Other, net 5,246 5,246
--------------------------------------------------------------------------------
Balance at December 31, 1997 $3,000 3,000 1,055,233 (19,481) 128,744 1,170,496
================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 122
<TABLE>
<CAPTION>
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEARS ENDED DECEMBER 31
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996 1995
Net income $ 97,237 83,232 224,032
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Change in:
Accrued investment income (20,568) (16,275) (22,202)
Reinsurance recoverables and other contract deposits (838,390) (159,713) 262,054
Deferred policy acquisition costs (113,040) (87,249) (23,141)
Other assets (61,796) (51,444) (67,650)
Future policy benefits 693,052 330,511 399,261
Policy and contract claims 105,503 14,652 74,173
Other liabilities and accrued expenses 319,787 65,184 184,756
Deferred income taxes (113) 13,992 29,411
Policyholder considerations (137,163) (144,748) (140,475)
Interest credited to policyholder account balances 345,937 262,532 192,522
Amortization and depreciation 32,744 28,375 19,196
Net realized investment (gains) (28,538) (24,531) (280,756)
Other, net 372 (14,554) 2,488
----------- ---------- ----------
Net cash provided by operating activities 395,024 299,964 853,669
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments sold or redeemed:
Fixed maturities available-for-sale 2,070,743 1,822,169 1,482,122
Mortgage loans 594,151 182,650 206,520
Equity securities 31,602 13,427 468,143
Short-term and other invested assets 163,393 84,748 414,102
Cost of investments purchased:
Fixed maturities available-for-sale (4,463,100) (3,428,943) (3,010,016)
Fixed maturities held-to-maturity - - (3,068)
Equity securities (47,283) (39,553) (89,062)
Short-term and other invested assets (293,857) (97,426) (16,471)
Mortgage loan originations (438,959) (593,438) (431,043)
Maturity of fixed maturities held-to-maturity - - 6,365
Maturity of fixed maturities available-for-sale 281,736 225,087 75,518
Increase in policy loans, net (153,399) (210,624) (211,526)
Investments in subsidiaries (6,032) (4,807) (126,363)
----------- ---------- ----------
Net cash used in investing activities (2,261,005) (2,046,710) (1,234,779)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net policyholder account and contract deposits 2,121,488 1,632,495 294,685
Issuance of debt 1,857 106,903 100,219
Repayment of debt (80,606) (19,497) (4,800)
Dividends (2,112) (1,832) (4,376)
Other, net 46,829 26,770 17,498
----------- ---------- ----------
Net cash provided by financing activities 2,087,456 1,744,839 403,226
----------- ---------- ----------
Effect of exchange rate changes (5,320) (266) 5,908
----------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 216,155 (2,173) 28,024
----------- ---------- ----------
Cash and cash equivalents at beginning of year 142,724 144,897 116,873
----------- ---------- ----------
Cash and cash equivalents at end of year $ 358,879 142,724 144,897
=========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 123
GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REORGANIZATION
In September 1996, the Board of Directors of General American Life Insurance
Company (General American) adopted the Reorganization Plan (Plan) which
authorized the reorganization (Reorganization) of General American into a mutual
insurance holding company structure. The Missouri Department of Insurance held
a public hearing on the Reorganization on December 19, 1996 and approved the
Plan on January 24, 1997. The policyholders of General American approved the
Plan on January 28, 1997 and the Reorganization became effective on April 24,
1997 (effective date). General American was the first company to obtain
approval and to form a mutual insurance holding company under the Missouri
Mutual Holding Company Statute.
Pursuant to the Reorganization, General American (the Company) (i) formed
General American Mutual Holding Company (GAMHC) as a mutual insurance holding
company under the insurance laws of the State of Missouri, (ii) formed
GenAmerica Corporation (GenAmerica) as an intermediate stock holding company
under the general laws of the State of Missouri, and (iii) amended and restated
its Charter and Articles of Incorporation to authorize the issuance of capital
stock and the continuance of its existence as a stock life insurance company
under the same name. GAMHC may, among other things, elect all of the directors
of GenAmerica and approve matters submitted for shareholder approval. As of the
effective date of the Reorganization, the membership interests and the
contractual rights of the policyholders of the Company were separated - the
membership interests automatically became, by operation of law, membership
interests in GAMHC and the contractual rights remained with the Company. Each
person who becomes the owner of a designated policy or contract of insurance or
annuity issued by the Company after the effective date of the Reorganization
(subject to certain exceptions and conditions set forth in the Articles of
Incorporation of GAMHC) will become a member of GAMHC and have a membership
interest in GAMHC by operation of law so long as such policy or contract remains
in force. The membership interests in GAMHC follow, and are not severable, from
the insurance policy or annuity contract from which the membership interest in
GAMHC is derived.
The Company issued 3 million shares of its authorized shares of capital stock to
GAMHC in 1997. GAMHC then contributed all of these to GenAmerica in exchange
for 1 thousand shares of its common stock. As a result, GenAmerica directly
owns the Company, and GAMHC indirectly owns the Company, through GenAmerica. In
addition, the Company capitalized $3 million of its unassigned surplus to paid
in capital.
The consolidated financial statements include the assets, liabilities, and
results of operations of the Company and its wholly owned subsidiaries, General
American Holding Company, a non-insurance holding company; Cova Corporation, an
insurance holding company; Paragon Life Insurance Company; Security Equity Life
Insurance Company; General Life Insurance Company of America; General Life
Insurance Company, its 63.8 percent owned subsidiary, Reinsurance Group of
America, Incorporated (RGA), an insurance holding company, and its 62.7 percent
owned subsidiary, Conning Corporation.
The Company's principal lines of business, conducted through General American or
one of its subsidiaries, are: Individual Life Insurance, Annuities, Group Life
and Health Insurance, Asset Management, and Reinsurance. The Company
distributes its products and services primarily through a nationwide network of
general agencies, independent brokers, and group sales and claims offices. The
Company (including its subsidiaries) is licensed to do business in all fifty
states, twelve Canadian provinces, Puerto Rico, and the District of Columbia.
Through its subsidiaries, the Company has operations in Europe, Pacific Rim
countries, and Latin America.
INITIAL PUBLIC OFFERING
In December 1997, the Company's subsidiary, Conning Corporation (Conning)
successfully completed an Initial Public Offering (IPO) of 2.875 million shares
of its common stock. Conning received net proceeds of approximately $34.5
million from the offering. After the IPO, the Company owns 62.7 percent of the
total shares outstanding of Conning's common stock. The publicly held stock of
Conning is listed on the NASDAQ National Market System
SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements are prepared on the basis of
generally accepted accounting principles (GAAP) and include the accounts of the
Company and its majority owned subsidiaries. Less than majority-owned entities
in which the Company has at least a 20 percent interest are reported on the
equity basis. All significant intercompany accounts and transactions have been
eliminated in consolidation. The preparation of financial statements requires
the use of estimates by management which affect the amounts reflected in the
financial statements. Actual results could differ from those estimates.
Accounts that the Company deems to be sensitive to changes in estimates include
future policy benefits and policy and contract claims, deferred acquisition
costs, and investment and deferred tax valuation allowances.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, APPLICABILITY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
TO MUTUAL LIFE INSURANCE AND OTHER ENTERPRISES. This Interpretation requires
mutual life insurance enterprises which had traditionally issued statutory based
financial statements that had been reported to be in conformity with GAAP, to
apply all authoritative accounting pronouncements in preparing those statements,
effective for periods beginning after December 31, 1994. In January 1995, the
FASB issued Statement of Financial Accounting Standards No. 120 (SFAS 120),
ACCOUNTING AND REPORTING BY MUTUAL LIFE INSURANCE ENTERPRISES AND BY INSURANCE
ENTERPRISES FOR CERTAIN LONG DURATION PARTICIPATING CONTRACTS, and the American
Institute of Certified Public Accountants (AICPA) issued Statement of Position
95-1 (SOP 95-1), ACCOUNTING FOR CERTAIN INSURANCE ACTIVITIES OF MUTUAL LIFE
ENTERPRISES, which together define the GAAP model for mutual life insurance
enterprises. These pronouncements define the enterprises and method of
accounting for certain participating life insurance contracts of mutual and
stock life insurance companies that meet the criteria defined in SOP 95-1. SFAS
120 also deferred implementation of Interpretation No. 40 to be concurrent with
implementation of SFAS 120. SFAS 120 and SOP 95-1 are effective for financial
statements issued for fiscal years beginning after December 15, 1995. The
effect of initially applying this new accounting model has been reported
retroactively through restatement of all periods presented.
<PAGE> 124
The significant accounting policies of the Company are as follows:
RECOGNITION OF REVENUE
For traditional life policies, including participating businesses, premiums are
recognized when due, less allowances for estimated uncollectible balances. For
limited payment contracts, net premiums are recorded as revenue, and the
difference between the gross premium and the net premium is deferred and
recognized in income in a constant relationship to insurance in force over the
estimated policy life. For universal life and annuity products, contract charges
for mortality, surrender, and expense, other than front-end expense charges, are
reported as income when charged to policyholders' accounts.
Other income represents the fees generated from the Company's non-insurance
operations, primarily service and contract fees relating to asset management,
system development, and third-party administration. Amounts are recognized when
earned.
INVESTED ASSETS
FIXED MATURITY AND EQUITY SECURITIES: Investment securities are accounted for
in accordance with SFAS 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES. SFAS 115 requires debt and equity securities to be
classified into categories of available-for-sale, trading securities, or held-
to-maturity depending on an entity's ability and positive intent to hold a
security to maturity. All of the Company's securities are classified as
available-for-sale. Fixed maturities available-for-sale are reported at fair
value and are so classified based on the possibility that such securities could
be sold prior to maturity if that action enables the Company to execute its
investment philosophy and appropriately match investment results to operating
and liquidity needs. Equity securities are carried at fair value.
Realized gains or losses on the sale of securities are determined on the basis
of specific identification. Unrealized gains and losses are recorded, net of
related income tax effects, in a separate component of stockholder equity.
MORTGAGE LOANS: Mortgage loans on real estate are stated at an unpaid principal
balance, net of unamortized discounts and valuation allowances for possible
impairment in value. The Company discontinues the accrual of interest on
mortgage loans which are more than 90 days delinquent. Interest received on
nonaccrual mortgage loans is generally reported as interest income.
POLICY LOANS, REAL ESTATE AND OTHER INVESTED ASSETS: Policy loans are carried at
an unpaid principal balance and are generally secured by the cash surrender
value. Investment real estate which the Company has the intent to hold for the
production of income is carried at depreciated cost, net of writedowns for other
than temporary declines in fair value and encumbrances. Properties held for
sale (primarily acquired through foreclosure) are carried at the lower of
depreciated cost (fair value at foreclosure plus capital additions less
accumulated depreciation and encumbrances) or fair value. Adjustments to
carrying value of properties held for sale are recorded in a valuation reserve
when the fair value is below depreciated cost. The accumulated depreciation and
encumbrances on real estate amounted to $47.0 million and $53.0 million at
December 31, 1997 and 1996, respectively. Direct valuation allowances amounted
to $6.7 million and $15.7 million at December 31, 1997 and 1996, respectively.
Other invested assets are principally recorded at fair value.
SHORT-TERM INVESTMENTS: Short-term investments, consisting primarily of money
market instruments and other debt issues purchased with an original maturity of
less than a year, are carried at amortized cost, which approximates fair value.
INVESTED ASSET IMPAIRMENT AND VALUATION ALLOWANCES: Invested assets are
considered impaired when the Company determines that collection of all amounts
due under the contractual terms is doubtful. The Company adjusts invested
assets to their estimated net realizable value at the point at which it
determines an impairment is other than temporary. In addition, the Company has
established valuation allowances for mortgage loans and other invested assets.
Valuation allowances for other than temporary impairments in value are netted
against the asset categories to which they apply. Additions to valuation
allowances are included in realized gains and losses.
The Company recognizes its proportionate share of the resultant gains or losses
on the issuance or repurchase of its subsidiaries' stock as a direct credit or
charge to retained earnings.
CASH AND CASH EQUIVALENTS: For purposes of reporting, cash and cash equivalents
represent cash, demand deposits and highly liquid short-term investments, which
include U.S. Treasury bills, commercial paper, and repurchase agreements with
original or remaining maturities of 90 days or less when purchased.
INVESTMENT INCOME
Bond premium and discounts are amortized into income using the scientific yield
method over the term of the security. Amortization of the premium or discount
on mortgage-backed securities is recognized using a scientific yield method
which considers the estimated timing and amount of prepayments of underlying
mortgage loans. Actual prepayment experience is periodically reviewed and
effective yields are adjusted when differences arise between the prepayments
originally anticipated and the actual prepayments received and currently
anticipated. When such differences occur, the net investment in the
mortgage-backed security is adjusted to the amount that would have existed had
the new effective yield been applied since the acquisition of the security with
a corresponding charge or credit to interest income (the "retrospective
method").
POLICY AND CONTRACT LIABILITIES
For traditional life insurance policies, future policy benefits are computed
using a net level premium method with actuarial assumptions as to mortality,
persistency, and interest established at policy issue. Assumptions established
at policy issue as to
<PAGE> 125
mortality and persistency are based on industry standards and the Company's
historical experience which, together with interest and expense assumptions,
provide a margin for adverse deviation. Interest rate assumptions generally
range from 2.5 percent to 11.0 percent.
For participating policies, future policy benefits are computed using a net
level premium method based on the guaranteed cash value basis for mortality and
interest. Mortality rates are similar to those used for statutory valuation
purposes. Interest rates generally range from 2.5 percent to 6.0 percent.
Dividend liabilities are established when earned.
When the liabilities for future policy benefits plus the present value of
expected future gross premiums are insufficient to provide for expected policy
benefits and expenses, unrecoverable deferred policy acquisition costs are
written off and thereafter a premium deficiency reserve is established through a
charge to earnings.
Policyholder account balances for universal life and annuity policies are equal
to the policyholder account value before deduction of any surrender charges.
The policyholder account value represents an accumulation of gross premium
payments plus credited interest less expense and mortality charges and
withdrawals. These expense charges are recognized in income as earned.
The range of weighted average interest crediting rates used by the Company and
its life insurance subsidiaries were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Universal life 6.00-7.10% 6.00-7.56% 6.00-7.87%
Annuities 5.70-6.20% 5.70-6.20% 5.69-6.29%
</TABLE>
Accident and health benefits for active lives are calculated using the net level
premium method and assumptions as to future morbidity, withdrawals, and interest
which provide a margin for adverse deviation. Benefit liabilities for disabled
lives are calculated using the present value of future benefits and experience
assumptions for claim termination, expense, and interest which also provide a
margin for adverse deviation.
POLICY AND CONTRACT CLAIMS
The Company establishes a liability for unpaid claims based on estimates of the
ultimate cost of claims incurred, which is comprised of aggregate case basis
estimates, average claim costs for reported claims, and estimates of unreported
losses based on past experience. Policy and contract claims include a provision
for both life and accident and health claims. Management believes the
liabilities for unpaid claims are adequate to cover the ultimate liability;
however, due to the underlying risks and the high degree of uncertainty
associated with the determination of the liability for unpaid claims, the
amounts which will ultimately be paid to settle these liabilities cannot be
determined precisely and may vary from the estimated amount included in the
consolidated balance sheets.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, which vary with and are primarily related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable from future profitability of the underlying
business. Such costs include commissions, premium taxes, as well as certain
other costs of policy issuance and underwriting.
For limited payment and other nonparticipating traditional life insurance
policies, the deferred policy acquisition costs are amortized with interest in
proportion to the ratio of the expected annual premium revenue to the expected
total premium revenue. Expected future premium revenue is estimated with the
same assumptions used for computing liabilities for future policy benefits for
these policies.
For participating life insurance, universal life, and annuity type contracts,
the deferred policy acquisition costs are amortized over a period of not more
than thirty years in relation to the present value of estimated gross profits
arising from interest margin, cost of insurance, policy administration, and
surrender charges.
The range of average rates of assumed interest used by the Company and its
insurance subsidiaries in estimated gross margins were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Participating life 8.17% 8.70% 7.81%
Universal life 6.25-7.79% 6.00-8.20% 6.00-7.56%
Annuities 7.00-7.84% 7.83% 8.04%
</TABLE>
The estimates of expected gross margins are evaluated regularly and are revised
if actual experience or other evidence indicates that revision is appropriate.
Upon revision, total amortization recorded to date is adjusted by a charge or
credit to current earnings. Under SFAS 115, deferred policy acquisition costs
are adjusted for the impact on estimated gross margins as if the net unrealized
gains and losses on securities had actually been realized.
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between $50
thousand and $2.5 million depending on the entity writing the policy.
The Company assumes and retrocedes financial reinsurance contracts which
represent low mortality risk reinsurance treaties. These contracts are reported
as deposits and are included in reinsurance recoverable/payable in the
accompanying consolidated balance sheet. The amount of revenue reported on these
contracts represents fees and the cost of insurance under the terms of the
reinsurance agreement.
<PAGE> 126
Reinsurance activities are accounted for consistent with terms of the risk
transfer reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premiums. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as assets
for these items and commissions and expense allowances received in connection
with reinsurance ceded have been accounted for in income as earned. Reinsurance
does not relieve the Company from its primary responsibility to meet claim
obligations. The Company evaluates the financial conditions of its reinsurers
annually.
FEDERAL INCOME TAXES
The Company and certain of its U.S. subsidiaries file a consolidated federal
income tax return. In order to consolidate, the Company must possess both 80
percent of the total voting power and 80 percent of the value of the stock of
the subsidiary. Further, even if it meets the 80 percent test, any acquired
life insurance company is not included in the consolidated return until the
acquired company has been a member of the group for five years. Prior to
satisfying the five-year requirement, the subsidiary files a separate federal
return. RGA Barbados, a subsidiary of RGA, also files a U.S. tax return. The
Company's Canadian, Argentine, Australian, Chilean, Mexican, Spanish, and United
Kingdom subsidiaries are taxed under applicable local statutes. The Company
uses the asset and liability method to record deferred income taxes.
Accordingly, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases, using enacted tax rates, expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled.
SEPARATE ACCOUNT BUSINESS
The assets and liabilities of the separate accounts represent segregated funds
administered and invested by the Company for purposes of funding variable life
insurance and annuity contracts for the exclusive benefit of the contract
holders. The Company charges the separate accounts for cost of insurance and
administrative expense associated with a contract and charges related to early
withdrawals by contract holders. The assets and liabilities of the separate
account are carried at fair value. The Company's participation in the separate
accounts (seed money) is carried at its fair value in the separate account, and
amounted to $6.2 million and $22.3 million at December 31, 1997 and 1996,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular financial
instrument. Although fair value estimates are calculated using assumptions that
management believes are appropriate, changes in assumptions could significantly
affect the estimates and such estimates should be used with care. The following
assumptions were used to estimate the fair value of each class of financial
instrument for which it was practicable to estimate fair value:
INVESTMENT SECURITIES: Fixed maturities are valued using quoted market prices,
if available. For securities not actively traded, fair values are estimated
using values obtained from independent pricing services or, in the case of
private placements, are estimated by discounting expected future cash flows
using a current market rate applicable to the yield, credit quality, and
maturity of investments. The fair values of equity securities are based on
quoted market prices.
MORTGAGE LOANS: The fair values of mortgage loans are estimated using discounted
cash flow analyses and interest rates currently being offered for similar loans
to borrowers with similar credit ratings. Loans with similar characteristics
are aggregated for purposes of the calculations.
POLICY LOANS: The fair value of policy loans approximates the carrying value.
The majority of these loans are indexed, with yield tied to a stated return.
POLICYHOLDER ACCOUNT BALANCES ON INVESTMENT TYPE CONTRACTS: Fair values for the
Company's liabilities under investment-type contracts are estimated using
discounted cash flow calculations based on interest rates currently being
offered for similar contracts with maturities consistent with those remaining
for the contracts being valued. For contracts with no defined maturity date, the
carrying value approximates fair value.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The separate account assets and
liabilities are carried at fair value as determined by the market value of the
underlying segregated investments.
SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS: The carrying amount is
considered a reasonable estimate of fair value.
LONG-TERM DEBT AND NOTES PAYABLE: The fair value of long-term debt and notes
payable is estimated using discounted cash flow calculations based on interest
rates currently being offered for similar instruments.
Refer to Note 4 for additional information on fair value of financial
instruments.
RECLASSIFICATION
The Company has reclassified the presentation of certain prior period
information to conform with the 1997 presentation.
<PAGE> 127
(2) SIGNIFICANT ACQUISITIONS AND DIVESTITURES
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now known
as Cova Corporation (Cova). At acquisition, Cova had total assets of
approximately $635.6 million. The purchase price of approximately $107.7
million was funded from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation and Subsidiaries (Conning), an investment management firm,
whereby the Company acquired Conning and subsequently contributed Conning and
General American Investment Management Company, a wholly owned subsidiary, to
form Conning Asset Management Company (CAM). At acquisition, Conning had total
assets of approximately $16.0 million. The purchase price consisted of
approximately $12.0 million in cash (from the Company's operations) and 3.2
million shares of CAM convertible redeemable preferred stock, with fair value of
approximately $17.0 million.
These transactions were accounted for using the purchase method of accounting.
The results of operations of the acquired entities are included in the
consolidated financial statements subsequent to the respective acquisition
dates. The excess of cost over fair value of net assets acquired amounted to
approximately $56.6 million and $23.1 million for Cova and Conning,
respectively, and is being amortized over approximately 20 years.
On January 3, 1995, the Company sold its 72 percent ownership in GenCare Health
Systems, Inc. to United HealthCare Corporation. Proceeds received net of
expenses were $365.0 million and the net realized gain on sale was $170.2
million.
The Company distributed its ownership of its wholly owned subsidiary, Walnut
Street Securities, Inc. (WSS), at December 31, 1997 to GenAmerica. The net book
value of WSS, was $4.48 million at the time of distribution. The revenue and
expenses of WSS are included in the Company's consolidated statement of
operations for 1997.
<PAGE> 128
(3) INVESTMENTS
Fixed maturities and equity securities
The amortized cost and estimated fair value of fixed maturity and equity
securities at December 31, 1997 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1997
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 48,074 1,125 (27) 49,172
Government agency
obligations 378,002 84,425 (1,281) 461,146
Corporate securities 5,491,210 319,682 (45,790) 5,765,102
Mortgage-backed securities 2,544,241 45,211 (17,832) 2,571,620
Asset-backed securities 265,725 3,380 (626) 268,479
---------- ---------- ---------- ---------
Total fixed maturities
available-for-sale $8,727,252 453,823 (65,556) 9,115,519
========== ========== ========== =========
Equity securities $ 23,558 653 - 24,211
========== ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
1996
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 28,980 368 (151) 29,197
Government agency
obligations 343,945 41,324 (970) 384,299
Corporate securities 4,071,775 158,361 (39,623) 4,190,513
Mortgage-backed securities 1,949,717 18,927 (14,386) 1,954,258
Asset-backed securities 198,934 1,599 (491) 200,042
---------- ---------- ---------- ---------
Total fixed maturities
available-for-sale $6,593,351 220,579 (55,621) 6,758,309
========== ========== ========== =========
Equity securities $ 21,460 1,137 (1,692) 20,905
========== ========== ========== =========
</TABLE>
The Company manages its credit risk associated with fixed maturities by
diversifying its portfolio. At December 31, 1997 and 1996, the Company held no
corporate debt securities or foreign government debt securities of a single
issuer which had a carrying value in excess of 10 percent of stockholder equity.
The amortized cost and estimated fair value of fixed maturities at December 31,
1997, by contractual maturity, are shown below (in thousands). Expected
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
<S> <C> <C>
Due in one year or less $ 67,409 67,921
Due after one year through five years 1,279,675 1,303,178
Due after five years through ten years 1,816,231 1,855,188
Due after ten years through twenty years 3,019,696 3,317,612
Mortgage-backed securities 2,544,241 2,571,620
------------- ---------
Total $ 8,727,252 9,115,519
============= =========
</TABLE>
<PAGE> 129
The sources of net investment income follow (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Fixed maturities $ 561,709 464,512 368,033
Mortgage loans 194,504 171,781 143,047
Real estate 34,164 39,062 37,108
Equity securities 1,317 755 622
Policy loans 148,316 133,511 127,920
Short-term investments 16,600 13,979 26,920
Other 13,943 9,705 (368)
-------- ------- -------
Investment revenue 970,553 833,305 703,282
Investment expenses (25,011) (26,422) (26,878)
-------- ------- -------
Net investment income $ 945,542 806,883 676,404
======== ======= =======
</TABLE>
Net realized gains (losses) from sales of investments consist of the following
(in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Fixed maturities:
Realized gains $ 23,969 27,928 30,139
Realized losses (16,796) (10,398) (9,000)
Equity securities:
Realized gains 1,835 6,146 306,142
Realized losses (1,457) (288) (5,259)
Other investments, net 20,987 1,143 (41,266)
------- ------- -------
Net realized investment gains $ 28,538 24,531 280,756
======= ======= =======
</TABLE>
Included in the net realized losses are permanent write-downs of approximately
$4.8 million during 1997.
A summary of the components of the net unrealized appreciation (depreciation) on
invested assets carried at fair value is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Unrealized appreciation (depreciation):
Fixed maturities available-for-sale $ 388,267 164,957
Equity securities and short-term investments 658 605
Derivatives 888 -
Effect of unrealized appreciation (depreciation) on:
Deferred policy acquisition costs (142,187) (70,038)
Present value of future profits (2,901) 1,986
Deferred income taxes (91,779) (36,705)
Other 139 -
Minority interest, net of taxes (24,341) (10,438)
---------- ---------
Net unrealized appreciation $ 128,744 50,367
========== =========
</TABLE>
The Company and its insurance subsidiaries have securities on deposit with
various state insurance departments and regulatory authorities with an amortized
cost of approximately $ 293.5 million and $278.6 million at December 31, 1997
and 1996, respectively.
MORTGAGE LOANS
The Company originates mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light industrial
facilities. Loan to value ratios at the time of loan approval are 75 percent or
less. The Company minimizes risk through a thorough credit approval process and
through geographic and property type diversification.
The Company's mortgage loans were distributed as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Arizona $ 156,453 7.2% $ 185,575 8.0%
California 358,443 16.5 378,376 16.4
Colorado 228,797 10.5 226,531 9.8
Florida 153,174 7.0 193,570 8.4
Georgia 131,861 6.1 141,442 6.1
Illinois 155,184 7.1 183,883 8.0
Maryland 104,567 4.8 99,944 4.3
Missouri 100,815 4.6 102,111 4.4
Texas 191,619 8.8 225,697 9.8
Virginia 84,140 3.9 92,663 4.0
Other 513,213 23.5 481,546 20.8
----------- --------- ----------- --------
Subtotal 2,178,266 100.0% 2,311,338 100.0%
Valuation reserve (38,004) (37,711)
----------- --------- ----------- --------
Total $ 2,140,262 $ 2,273,627
=========== ========= =========== ========
</TABLE>
<PAGE> 130
<TABLE>
<CAPTION>
1997 1996
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Property Type
Apartment $ 101,038 4.6% $ 131,352 5.7%
Retail 903,438 41.5 966,298 41.8
Office building 622,185 28.6 641,204 27.7
Industrial 445,253 20.4 479,755 20.8
Other commercial 106,352 4.9 92,729 4.0
----------- --------- ----------- --------
Subtotal 2,178,266 100.0% 2,311,338 100.0%
Valuation reserve (38,004) (37,711)
----------- --------- ----------- --------
Total $ 2,140,262 $ 2,273,627
=========== ========= =========== ========
</TABLE>
An impaired loan is measured at the present value of expected future cash
flows or, alternatively, the observable market price or the fair value of the
collateral.
Mortgage loans which have been non-income producing for the preceding twelve
months were $8.7 million and $5.1 million at December 31, 1997 and 1996,
respectively. At December 31, 1997 and 1996, the recorded investment in
mortgage loans that were considered impaired under SFAS 114, ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN, was $119.7 million and $86.5 million,
respectively, with related allowances for credit losses of $12.7 million and
$8.0 million, respectively. The average recorded investment in impaired
loans during 1997 and 1996 was $103.1 million and $107.9 million,
respectively. For the years ended December 31, 1997, 1996, and 1995, the
Company recognized $9.7 million, $6.6 million, and $11.9 million,
respectively, of interest income on those impaired loans, which included $9.9
million, $6.7 million, and $12.0 million, respectively, of interest income
recognized using the cash basis method of income recognition.
The Company has outstanding mortgage loan commitments as of December 31, 1997
totaling $284.6 million. During 1995, the Company entered into an agreement
whereby approximately $109.8 million of mortgage loans were sold by the
Company for securitization and resale by a financial institution as mortgage
pass-through certificates. In conjunction with this transaction, the Company
entered into futures positions to hedge against interest rate risk. The sale
of these mortgage loans resulted in a net loss of approximately $.4 million.
In addition, the close-out of the futures positions related to this
transaction resulted in a net loss of approximately $6.4 million.
DERIVATIVES The Company has a variety of reasons to use derivative
instruments, such as to attempt to protect the Company against possible
changes in the market value of its portfolio as a result of interest rate
changes and to manage the portfolio's effective yield, maturity, and
duration. The Company does not invest in derivatives for speculative
purposes. Upon disposition, a realized gain or loss is recognized
accordingly, except when exercising an option contract or taking delivery of
a security underlying a futures contract. In these instances, the
recognition of gain or loss is postponed until the disposal of the security
underlying the option or futures contract.
Summarized below are the specific types of derivative instruments used by the
Company.
INTEREST RATE SWAPS: The Company manages interest rate risk on certain
contracts, primarily through the utilization of interest rate swaps. Under
interest rate swaps, the Company agrees with counterparties to exchange, at
specified intervals, the payments between floating and fixed-rate interest
amounts calculated by reference to notional amounts. Net interest payments are
recognized within net investment income in the consolidated statements of
operations.
At December 31, 1997, the Company had thirty outstanding interest rate swap
agreements which expire at various dates through 2025. Under thirteen of the
agreements, the Company receives a fixed rate ranging from 5.975 percent to
7.51 percent on a notional amount of $68.6 million and pays a floating rate
based on London Interbank Offered Rate (LIBOR). Under the remaining
seventeen outstanding interest rate swap agreements, the Company receives a
floating rate based on LIBOR on a notional amount of $93 million and pays a
fixed rate ranging from 6.495 percent to 8.562 percent. The estimated fair
value of the agreements was a net loss of approximately $2.5 million which is
not recognized in the accompanying consolidated balance sheet.
At December 31, 1996, the Company had eight outstanding interest rate swap
agreements which expire at various dates through 2025. Under six of the
agreements, the Company receives a fixed rate ranging from 5.825 percent to
8.31 percent on a notional amount of $25.4 million and pays a floating rate
based on LIBOR. Under the remaining two outstanding interest rate swap
agreements, the Company receives a floating rate based on LIBOR on a notional
amount of $15 million and pays a fixed rate ranging from 6.52 percent to 6.90
percent. The estimated fair value of the agreements was a net gain of
approximately $0.3 million which is not recognized in the accompanying
consolidated balance sheet.
<PAGE> 131
CURRENCY SWAPS: Under foreign currency swaps, the Company agrees with
other parties to exchange at specified intervals, the difference between two
currencies on an exchange rate basis the interest amounts calculated by
reference to an agreed notional principal amount. The Company uses this
technique for foreign denominated assets to match dollar denominated
liabilities of various fixed income products. Net interest payments are
recognized within net investment income in the consolidated statements of
operations.
At December 31, 1997 and 1996, the Company had six and two outstanding
currency swap agreements, respectively, which expire at various dates through
2026. The notional amount was $34.3 million and $13.9 million, respectively.
The estimated fair value of the agreements was a net loss of $1.3 million
and $2.3 million, respectively, which is not recognized in the accompanying
consolidated balance sheet.
FUTURES: A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The
Company generally invests in futures on U.S. Treasury Bonds, U.S. Treasury
Notes, and the S&P 500 Index and typically closes the contract prior to the
delivery date. These contracts are generally used to manage the portfolio's
effective maturity and duration.
<PAGE> 132
Futures contracts outstanding as of years ending 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
($ in thousands)
NET (SOLD)
PURCHASE NOTIONAL FAIR UNREALIZED
POSITION AMOUNT VALUE GAIN(LOSS)
<S> <C> <C> <C> <C>
December 31, 1997 (510) $51,000 60,940 ($907)
December 31, 1996 50 12,500 14,653 404
</TABLE>
OPTIONS: Currently, the Company buys both exchange-traded and
over-the-counter options based on the S&P 500 Index to support equity indexed
annuity policies. An equity indexed annuity is a product under which
contractholders receive a minimum guaranteed value and also participate in
stock market appreciation. Options are marked to market value quarterly. The
change in value is reflected in investment income to assure proper matching
of the hedge to changes in the liability. The amounts involved are not
material.
The Company is exposed to credit related risk in the event of nonperformance
by counterparties to financial instruments but does not expect any
counterparties to fail to meet their obligations. Where appropriate, master
netting agreements are arranged and collateral is obtained in the form of
rights to securities to lower the Company's exposure to credit risk. It is
the Company's policy to deal only with highly rated companies. There are not
any significant concentrations with counterparties.
(4) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1997 and 1996. SFAS
107, DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS, defines fair
value of a financial instrument as the amount at which the instrument could
be exchanged in a current transaction between willing parties (in thousands):
<TABLE>
<CAPTION>
1997 1996
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
Assets:
Fixed maturities $ 9,115,519 9,115,519 6,758,309 6,758,309
Mortgage loans 2,140,262 2,333,895 2,273,627 2,354,072
Policy loans 2,073,152 2,073,152 1,917,861 1,917,861
Short-term investments 190,374 190,374 55,594 55,594
Other invested assets 243,921 243,921 183,612 183,628
Separate account assets 4,118,860 4,118,860 2,833,258 2,833,258
Liabilities:
Policyholder account
balances relating to
investment contracts $ 6,696,690 6,608,068 6,281,967 6,190,919
Long term debt and
notes payable 214,477 222,419 295,614 293,913
Separate account
liabilities 4,112,666 4,112,666 2,810,907 2,810,907
</TABLE>
(5) REINSURANCE
The Company is a major reinsurer to the life and health industry. The effect
of reinsurance on premiums and other considerations is as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Direct $ 1,120,169 1,097,340 1,069,248
Assumed 996,861 827,171 700,152
Ceded (348,861) (301,283) (271,387)
----------- --------- ---------
Net insurance premiums and other
considerations $ 1,768,169 1,623,228 1,498,013
=========== ========= =========
</TABLE>
Reinsurance assumed represents approximately $212.5 billion, $160.0 billion,
and $157.9 billion, of insurance in force at December 31, 1997, 1996, and
1995, respectively. The amount of ceded insurance in force, including
retrocession, was $50.4 billion, $53.2 billion, and $48.7 billion, for 1997,
1996, and 1995, respectively.
<PAGE> 133
(6) FEDERAL INCOME TAXES
Income tax expense (benefit) attributable to income from operations consists
of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Current income tax expense $ 65,778 45,902 115,769
Deferred income tax expense
(benefit) (113) 13,992 29,411
---------- ------- -------
Provision for income taxes $ 65,665 59,894 145,180
========== ======= =======
</TABLE>
Income tax expense attributable to income from operations differed from the
amounts computed by applying the U.S. federal income tax rate of 35 percent
to pre-tax income as a result of the following (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Computed "expected" tax expense $ 64,763 57,055 135,353
Increase (decrease) in income tax
resulting from:
Surplus tax on mutual life
insurance companies 5,325 4,777 -
Foreign tax rate in excess
of U.S. tax rate 556 941 763
Tax preferred investment
income (6,583) (7,318) (5,784)
State tax net of federal benefit 830 971 292
GAAP/tax basis difference
on GenCare sale - - 15,710
Foreign tax credit (594) - -
Goodwill amortization 956 895 567
Difference in book vs. tax
basis in domestic
subsidiaries 2,166 2,230 1,547
Other, net (1,754) 343 (3,268)
---------- ------- -------
Provision for income taxes $ 65,665 59,894 145,180
========== ======= =======
</TABLE>
Total income taxes were allocated as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Provision for income taxes $ 65,665 59,894 145,180
Income tax from stockholder equity:
Unrealized holding gain
or loss on debt and
equity securities
recognized for financial
reporting purposes 55,923 (24,612) 99,871
Foreign currency translation (12,122) - -
Other (437) (1,023) -
---------- ------- -------
Total income tax $ 109,029 34,259 245,051
========== ======= =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1997 and 1996
are presented below (in thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets:
Reserve for future policy benefits $ 149,496 138,848
Deferred acquisition costs capitalized
for tax 110,418 95,332
Difference in basis of post retirement
benefits 6,846 13,993
Net operating loss 40,915 22,789
Other, net 132,354 106,263
---------- -------
Gross deferred tax assets 442,029 377,225
Less valuation allowance 1,150 1,299
---------- -------
Total deferred tax asset after valuation
allowance $ 438,879 375,926
========== =======
</TABLE>
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax liabilities:
Unrealized gain on investments $ 78,420 63,204
Deferred acquisition costs capitalized
for financial reporting 282,714 246,858
Difference in the tax basis of
cash and invested assets 45,551 19,222
Other, net 121,240 89,919
---------- -------
Total deferred tax liabilities 527,925 419,203
---------- -------
Net deferred tax liability $ 89,046 43,277
========== =======
</TABLE>
<PAGE> 134
The Company has not recognized a deferred tax liability for the
undistributed earnings of its wholly owned foreign subsidiaries because the
Company currently does not expect those unremitted earnings to become taxable
to the Company in the foreseeable future. This is because the unremitted
earnings will not be repatriated in the foreseeable future, or because those
unremitted earnings that may be repatriated will not be taxable through the
application of tax planning strategies that management would utilize.
As of December 31, 1997, the Company has provided for a 100 percent valuation
allowance against the deferred tax asset related to the net operating losses
of RGA's Australian, Argentine, and UK subsidiaries and Genelco's Spanish and
Mexican subsidiaries. The Company has provided for a 50 percent valuation
allowance against the deferred tax asset related to International
Underwriting Services' net operating losses which were incurred in separate
return limitation years. Based on income projections for future years, a 50
percent valuation allowance is appropriate.
At December 31, 1997, the Company had capital loss carryforwards of $.8
million. During 1997, 1996, and 1995 the Company paid income taxes totaling
approximately $70.8 million, $20.7 million, and $121.7 million, respectively.
At December 31, 1997, the Company's subsidiaries had recognized deferred tax
assets associated with net operating loss carryforwards of approximately
$115.7 million. The net operating loss and capital losses are expected to be
utilized during the period allowed for carryforwards.
(7) DEFERRED POLICY ACQUISITION COSTS
A summary of the policy acquisition costs deferred and amortized is as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of year $ 652,251 526,939 664,452
Transfer of present value of future
profits 19,279 - -
Policy acquisition costs deferred 267,008 206,790 163,218
Policy acquisition costs amortized (211,979) (182,038) (176,216)
Interest credited 40,843 38,944 37,405
Deferred policy acquisition costs relating
to change in unrealized (gain) loss on
investments available for sale (72,149) 61,616 (161,920)
---------- ------- --------
Balance at end of year $ 695,253 652,251 526,939
========== ======= ========
</TABLE>
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several non-qualified, defined benefit, and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Service cost $ 5,915 5,421 4,074
Interest 8,597 8,047 7,160
Return on plan assets (29,043) (14,207) (27,984)
Amortization and deferral 18,637 4,646 19,841
Other - 192 -
---------- --------- ---------
Pension costs $ 4,106 4,099 3,091
========== ========= =========
</TABLE>
<PAGE> 135
The following table presents the plans' funded status and amount
recognized in the Company's consolidated balance sheets at December 31, 1997
and 1996 based on the actuarial valuations as of December 31, 1997 and 1996
(in thousands):
<TABLE>
<CAPTION>
1997 1996
Qualified Other Qualified Other
Plans Plans Plans Plans
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit
obligation, including vested
benefits of $79,995 and
$19,057 for 1997 and
$74,223 and $18,560
for 1996 82,758 27,965 76,928 26,897
--------- ------ --------- ------
Projected benefit obligation for
service rendered to date 97,662 32,168 92,825 29,726
Plan assets at fair value primarily
listed stocks and bonds 133,477 128,545
Plan assets in excess (less than)
projected benefit obligations 35,815 (32,168) 35,720 (29,726)
Unrecognized net transition obligation
at December 31 4,021 2,701
Pension cost funded in advance $ 35,815 35,720
========= =======
Accrued pension liability (28,147) (27,025)
======== ========
</TABLE>
Assumptions used for the December 31, 1997 and 1996 projected benefit obligation
included a 7.25 percent current discount rate, a same age-based salary scale and
4.50 percent increase rate, respectively, for future compensation levels, and a
9.25 percent projected return on plan assets.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service. Contributions
to the plan are determined annually by the Board of Directors and are based upon
salaries of eligible associates. Full vesting occurs after five years of
continuous service. The Company's contribution to the plan was $10.4 million,
$8.8 million, and $9.2 million for 1997, 1996, and 1995, respectively
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age while working
for the Company. Alternatively, retirees may elect certain prepaid health care
benefit plans.
The Company uses the accrual method to account for the costs of its retiree
benefit plans and amortizes its transition obligation for retirees and fully
eligible or vested employees over 20 years. The unamortized transition
obligation was $16.8 million and $17.8 million at December 31, 1997 and 1996,
respectively. Net postretirement benefit costs for the years ended December 31,
1997, 1996, and 1995 were $5.1 million, $5.8 million, and $5.4 million,
respectively, and include the expected cost of such benefits for newly eligible
or vested employees, interest cost, gains and losses arising from difference
between actuarial assumptions and actual experience, and amortization of the
transition obligation. The liability for the Company as of December 31, 1997 and
$27.8 million and $25.6 million, respectively.
Assumptions used were as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Discount rate in determining benefit obligations 7.25% 7.25%
Healthcare cost trend
First year:
Indemnity plan 8.0% 9.0%
HMO plan 8.0% 8.0%
Dental plan 8.0% 9.0%
Ultimate 5.00% 5.25%
</TABLE>
The health care cost trend rate assumption has a significant effect on the
amount reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1997 by $4.7 million or
12.5 percent. The aggregate of the service cost and interest cost components of
net periodic postretirement benefit cost for 1997 would increase by $.6 million
or 15.5 percent.
<PAGE> 136
(9) DEBT
The Company's long-term debt and notes payable consists of the following
($ in millions):
<TABLE>
<CAPTION>
Face value
at December 31,
Description Rate Maturity 1997 1996
<S> <C> <C> <C> <C>
Long-term debt:
General American surplus note 7.625% January 2024 $107.0 $107.0
RGA senior note 7.250% April 2006 100.0 100.0
Notes payable
General American 5.555% March 1997 - 80.5
RGA Australia Hldgs. 5.460% April 1998 7.8 7.6
------ ------
Total long-term debt and notes payable $214.8 $295.1
====== ======
</TABLE>
The difference between the face value of debt and the carrying value per the
consolidated balance sheets is unamortized discount.
General American's surplus note pays interest on January 15 and July 15 of
each year. The note is not subject to redemption prior to maturity. Payment
of principal and interest on the note may be made only with the approval of
the Missouri Director of Insurance.
The RGA senior note pays interest semiannually on April 1 and October 1. The
ability of RGA to make debt principal and interest payments as well as make
dividend payments to shareholders is ultimately dependent on the earnings and
surplus of its subsidiaries and the investment earnings on the undeployed
debt proceeds. The transfer of funds from the insurance subsidiaries to
Reinsurance Group of America, Incorporated is subject to applicable insurance
laws and regulations.
The General American note payable was retired during December of 1997.
The RGA Australian note had drawdowns for the respective years of $2.0
million in January 1997, $5.6 million in January 1996, and $2.0 million in
July 1996. Principal repayments are due in April 1998 and are expected to be
renewed under the terms of the line of credit. This agreement contains
various restrictive covenants which primarily pertain to limitations on the
quality and types of investments, minimum requirements of net worth, and
minimum rating requirements.
Interest paid on debt during 1997, 1996, and 1995 amounted to $20.0 million,
$19.9 million, and $9.0 million, respectively.
As of December 31, 1997, the Company was in compliance with all covenants
under its debt agreements.
(10) REGULATORY MATTERS
The Company and its insurance subsidiaries are subject to financial statement
filing requirements in their respective state of domicile, as well as the
states in which they transact business. Such financial statements, generally
referred to as statutory financial statements, are prepared on a basis of
accounting which varies in some respects from GAAP. Statutory accounting
practices include: (1) charging of policy acquisition costs to income as
incurred; (2) establishment of a liability for future policy benefits
computed using required valuation standards; (3) nonprovision of deferred
federal income taxes resulting from temporary differences between financial
reporting and tax bases of assets and liabilities; (4) recognition of
statutory liabilities for asset impairments and yield stabilization on fixed
maturity dispositions prior to maturity with asset valuation reserves based
on a statutorily determined formulas; and (5) valuation of investments in
bonds at amortized cost.
Net income and policyholders' surplus of the Company for the years ended
December 31, 1997, 1996, and 1995, as determined in accordance with statutory
accounting practices, are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net income $ 39,737 18,464 236,962
Policyholders' surplus 844,110 636,260 589,783
</TABLE>
Under Risk-Based Capital (RBC) requirements, General American and its
insurance subsidiaries are required to measure its solvency against certain
parameters. As of December 31, 1997, the Company and its insurance
subsidiaries exceeded the established RBC minimums. In addition, the Company
and its insurance subsidiaries exceeded the minimum statutory capital and
surplus requirements of their respective states of domicile.
The Company and its insurance subsidiaries are subject to limitations on the
payment of dividends. Generally, dividends during any year may not be paid
without prior regulatory approval, in excess of the lessor of (and with
respect to life and health subsidiaries in Missouri, in excess of the greater
of): (a) 10 percent of the statutory surplus as of the preceding December 31
or (b) the statutory gain from operations for the preceding year.
<PAGE> 137
(11) LEASE COMMITMENTS
The Company has entered into operating leases for office space and other
assets, principally office furniture and equipment. Future minimum lease
obligations under noncancelable leases are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Year ended December 31:
<S> <C>
1998 $ 17,583
1999 15,510
2000 12,621
2001 8,680
2002 6,276
Thereafter 3,107
</TABLE>
Operating lease expense totaled $16.4 million, $17.0 million, and $11.6 million
in 1997, 1996, and 1995, respectively
(12) PARTICIPATING POLICIES AND DIVIDENDS TO POLICYHOLDERS
Over 27.5 percent and 31.2 percent of the Company's business in force relates
to participating policies as of December 31, 1997 and 1996, respectively.
These participating policies allow the policyholders to receive dividends
based on actual interest, mortality, and expense experience for the related
policies. These dividends are distributed to the policyholders through an
annual dividend, using current dividend scales which are approved by the
Board of Directors.
(13) CONTINGENT LIABILITIES
From time to time, the Company is subject to litigation related to its
insurance business and to employment related matters in the normal course of
business. Management does not believe that the Company is party to any such
pending litigation which would have a material adverse effect on its
financial position or future operations.
<PAGE> 138
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant
to authority conferred in that section.
RULE 484 UNDERTAKING
Section 351.355 of the Missouri General and Business Corporation Law, in
brief, allows a corporation to indemnify any person who is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, against expenses, including attorneys'
fees, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation. When any person was or is a party or is
threatened to be made a party in an action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the Fact that he
is or was a director, officer, employee, or agent of the corporation,
indemnification may be paid unless such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation. In the event of such a determination indemnification is allowed
if a court determines that the person is fairly and reasonably entitled to
indemnity. A corporation has the power to give any further indemnity to any
person who is or was a director, officer, employee, or agent, provided for in
the articles of incorporation or as authorized by any by-law which has been
adopted by vote of the shareholders, provided that no such indemnity shall
indemnify any person's conduct which was finally adjudged to have been
knowingly fraudulent, deliberately dishonest, or willful misconduct.
In accordance with Missouri law, General American's Board of Directors, at
its meeting on 19 November 1987, and the policyholders of General American at
the annual meeting held on 26 January 1988, adopted the following
resolutions:
"BE IT RESOLVED THAT
II-1
<PAGE> 139
1. The company shall indemnify any person who is, or was a director,
officer, or employee of the company, or is or was serving at the
request of the company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against any and all expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him or her in connection with any civil,
criminal, administrative, or investigative action, proceeding, or claim
(including an action by or in the right of the company), by reason of
the fact that he or she was serving in such capacity if he or she acted
in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the company; provided that such
person's conduct is not finally adjudged to have been knowingly
fraudulent, deliberately dishonest, or willful misconduct.
2. The indemnification provided herein shall not be deemed exclusive
of any other rights to which a director, officer, or employee may be
entitled under any agreement, vote of policyholders or disinterested
directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity which holding such
office, and shall continue as to a person who has ceased to be a
director, officer, or employee and shall inure to the benefit of the
heirs, executors and administrators of such a person."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-2
<PAGE> 140
REPRESENTATIONS PURSUANT TO RULE 6e-3 (T)
This filing is made pursuant to Rules 6c-3 and 6e-3 (T) under the Investment
Company Act of 1940.
Registrant elects to be governed by Rule 6e-3 (T) (b) (13) (i) (A) under the
Investment Company Act of 1940 with respect to the Policies described in the
Prospectuses.
Registrant makes the following representations:
(1) Section 6e-3 (T) (b) (13) (iii) (F) has been relied upon.
(2) The level of the mortality and expense risk charge is within the
range of industry practice for comparable flexible premium
variable life insurance policies, and is reasonable in relation
to the risks assumed by the Company under the Policies.
(3) Registrant has concluded that there is a reasonable likelihood
that the distribution financing arrangement of the Separate
Account will benefit the Separate Account and Owners and will
keep and make available to the Commission on request a
memorandum setting forth the basis for this representation.
(4) The Separate Account will invest only in management investment
companies which have undertaken to have a board of directors or
trustees, a majority of whom are not interested persons of the
company, formulate and approve any plan under Rule 12b-1 to
finance distribution expenses.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of the mortality and expense risk charges
contained in other flexible premium variable life insurance policies.
Registrant undertakes to keep and make available to the Commission on request
the documents used to support the representation in paragraph (2) above.
II-3
<PAGE> 141
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
Joint and Survivor Variable Universal Life 98 Prospectus, consisting
of 55 pages.
The undertaking to file reports required by Section 15 (d), 1934 Act.
The undertaking pursuant to Rule 484, 1933 Act.
Representations pursuant to Rule 6e-3 (T), 1940 Act.
The signatures.
1. The following exhibits (which correspond in number to the numbers under
paragraph A of the instructions for exhibits to Form N-8B-2):
(1) Resolution of the Board of Directors of General
American authorizing establishment of the
Separate Account<F1>
(2) Not applicable
(3) (a) Principal Underwriting Agreement<F1>
(b) Proposed form of Selling Agreement<F1>
(c) Commission Schedule<F1>
(4) Not applicable
(5) Form of Joint and Survivor Variable Universal Life 98
Policy (to be supplied)
(6) (a) Amended Charter and Articles of Incorporation of
General American
(b) Amended and Restated By-Laws of General American
(7) Not applicable
(8) (a) Form of Agreement to Purchase Shares of
General American Capital Company (to be supplied)
II-4
<PAGE> 142
(b) Form of Participation Agreement with Variable
Insurance Products Fund (to be supplied)
(c) Form of Participation Agreement with Variable
Insurance Products Fund II (to be supplied)
(d) Form of Participation Agreement with J.P. Morgan
Series Trust II (to be supplied)
(e) Form of Participation Agreement with VanEck
Worldwide Insurance Trust (to be supplied)
(f) Form of Participation greement with American
Century Variable Portfolios (to be supplied)
(9) Not applicable
(10) (a) Form of Application
(b) Form of Application for Standard FRC-VUL Policy 4
(c) Form of Application for FRC-VUL Policy -- Guaranteed Issue 4
(d) Form of Master Application for FRC-VUL Policy 4
2. Memorandum describing General American's issuance,
transfer, and redemption procedures for the Policies and
General American's procedure for conversion to a fixed
benefit policy.
3. The following exhibits are numbered to correspond to the numbers in the
instructions as to exhibits for Form S-6.
(1) See above
(2) See Exhibit 1(5)
(3) Opinion of Matthew P. McCauley, Associate General
Counsel of General American
(4) No financial statements will be omitted from the
Prospectuses pursuant to prospectus instructions 1(b)
or (c).
(5) Not applicable
II-5
<PAGE> 143
4. Opinion and Consent of Susan M. Benjamin, F.S.A., M.A.A.A.
5. The consent of KPMG Peat Marwick LLP, Independent
Certified Public Accountants.
[FN]
- ---------------------
<F1> Incorporated by reference to the initial Registration Statement
and File No. 33-48550.
II-6
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General American
Life Insurance Company and General American Separate Account Eleven certify
that, when amended as indicated, this Registration Statement will meet all of
the requirements for effectiveness pursuant to Rule 481 under the Securities
Act of 1933, and they have they duly caused this amended Registration
Statement to be signed on their behalf by the undersigned thereunto duly
authorized, and the seal of General American Life Insurance Company to be
hereunto affixed and attested, all in the City of St. Louis, State of
Missouri, on the 22nd day of May 1998.
GENERAL AMERICAN SEPARATE ACCOUNT
ELEVEN (Registrant)
(Seal) BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for Registrant
and as Depositor)
Attest: ------------------------- By: ----------------------------
Robert J. Banstetter, Sr. Richard A. Liddy
Secretary President
General American Life
Insurance Company
II-7
<PAGE> 145
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
- ------------------------- Chairman, President 5/22/98
Richard A. Liddy (Principal Executive
Officer)
- ------------------------- Vice President 5/22/98
John W. Barber Controller
(Principal Accounting
Officer)
- -------------------------
August A. Busch, III<F*> Director
- -------------------------
William E. Cornelius<F*> Director
- -------------------------
John C. Danforth<F*> Director
- -------------------------
Bernard A. Edison<F*> Director
- -------------------------
Richard A. Liddy Director 5/22/98
- -------------------------
William E. Maritz<F*> Director
- -------------------------
Craig D. Schnuck<F*> Director
II-8
<PAGE> 146
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
- -------------------------
William P. Stiritz<F*> Director
- -------------------------
Andrew C. Taylor<F*> Director
- -------------------------
H. Edwin Trusheim<F*> Director
- -------------------------
Robert L. Virgil, Jr.<F*> Director
- -------------------------
Virginia V. Weldon<F*> Director
- -------------------------
Ted C. Wetterau<F*> Director
By -----------------------------
Matthew P. McCauley
<FN>
<F*> Original powers of attorney authorizing Matthew P. McCauley to sign this
Registration Statement and Amendments thereto on behalf of the Board of
Directors of General American Life Insurance Company are on file with the
Securities and Exchange Commission.
</TABLE>
II-9
<PAGE> 147
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Source
Exhibit or Page
Number Description Number
- ------ ----------- ------
<C> <C>
1. Amended Charter and Articles of Incorporation of
General American
2. Amended and Restated By-laws of General American
3. Opinion of Susan M. Benjamin, FSA, MAAA
4. Memorandum describing issuance, transfer, and redemption
procedures
5. Opinion of Matthew P. McCauley, Associate General
Counsel of General American
6. Consent of KPMG Peat Marwick LLP, Independent
Certified Public Accountants
</TABLE>
<PAGE> 1
Exhibit #1
AMENDED AND RESTATED CHARTER
and
ARTICLES OF INCORPORATION
of
GENERAL AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
The name of the Company shall continue to be General American Life
Insurance Company.
ARTICLE II
The principal office of the Company shall continue to be located at 700
Market Street in the City of St. Louis, in the State of Missouri.
ARTICLE III
The Company is incorporated for the purpose of making insurance upon
the lives of individuals and every assurance pertaining thereto or connected
therewith, to grant, purchase and dispose of annuities and endowments of
every kind and description whatsoever, to provide an indemnity against death
and for weekly or other periodic indemnity for disability occasioned by
accident or sickness to the person of the assured and to have all the further
rights, powers and privileges granted or permitted life insurance companies
organized under the provisions of Chapter 376 R.S.Mo., and all Acts
amendatory thereof or additional thereto.
ARTICLE IV
The Company was originally organized as a domestic stock and mutual
life insurance company in 1933 and, in a process initiated in 1936, converted
to a mutual company with no capital stock. Pursuant to a Plan of
Reorganization (the "Plan") adopted by the Company as of 26 September 1996,
and in accordance with Senate Bill No. 759 as enacted by the 1996 Session of
the 88th General Assembly of the State of Missouri (Section 376.1300 et seq.
R.S.Mo.)(the "MHC Statute"), the Company converted to a stock form life
insurance company, without members, and each member of the Company
immediately prior to the consummation of the reorganization described in the
Plan became, automatically by operation of law, a member of General American
Mutual Holding
<PAGE> 2
Company in accordance with the provisions of the Articles of Incorporation and
By-laws of General American Mutual Holding Company and the MHC Statute.
The aggregate number of shares of stock that the Company shall be
authorized to issue shall be five million (5,000,000) shares of common stock,
with par value of one dollar ($1.00) per share.
No holder of stock of the Company shall be entitled as a matter of
right to subscribe for or purchase any part of any new or additional issue of
stock, or securities convertible into stock, of any class whatsoever, whether
now or hereafter authorized, and all such additional shares of stock or other
securities convertible into stock may be issued and disposed of by the Board
of Directors to such person or persons and on such terms and for such
consideration (so far as may be permitted by law) as the Board of Directors,
in its absolute discretion, may deem advisable.
The Company shall be a continuation of the original corporation of the
same name whose first Certificate of Authority to transact a life insurance
business was granted by the Superintendent of the Insurance Department on the
5th day of September, 1933.
ARTICLE V
The corporate powers of the Company shall be vested in a Board of
Directors and shall be exercised by the Board and by such officers, agents,
employees and committees, including an Advisory Committee, as the Board may,
in its discretion, from time to time appoint and empower. The Board shall
have the power from time to time to make, amend or repeal such By-laws, rules
and regulations for the transaction of the business of the Company as the
Board may deem expedient and as are not inconsistent with this Amended and
Restated Charter and Articles of Incorporation or the constitution or other
laws of the State of Missouri. The Company shall have perpetual succession
for a term of nine hundred ninety-nine (999) years.
ARTICLE VI
The Board of Directors shall consist of not less than nine (9) and not
more than fifteen (15) persons elected as hereinafter provided. At least one
Director shall be a citizen and resident of the state of Missouri, and a
majority of the Directors shall be
<PAGE> 3
policyholders of the Company. Meetings of the Board of Directors shall be held
at such time and place and upon such notice as shall be prescribed by the
By-laws of the Company. Vacancies in the Board of Directors may be filled by
the shareholders at any regular meeting or at any special meeting called for
that purpose, or by vote of a majority of Directors present at any regular or
special meeting. Vacancies occasioned by death, resignation or disqualification
when filled shall be filled for the unexpired term for which such Director was
elected. Any Director elected by the Board to fill a vacancy shall have the
same qualifications required of the Director whose place he or she takes. A
majority of the members of the Board of Directors, or such greater number
thereof as may from time to time be provided for in the By-laws of the
Company, shall constitute a quorum for the transaction of business, but a
smaller number may meet and adjourn from time to time until a quorum is present.
ARTICLE VII
The incumbent members of the Board of Directors shall continue to be
Directors of the Company until their respective terms have expired or until
their successors are duly elected and qualified. New Directors will be
elected by class so as to equalize as nearly as possible the number in each
class of Directors. There shall continue to be three classes of Directors,
each class serving for a three year term expiring one year after expiration
of the term of the immediately preceding class (effective at the annual
meeting of the Company for the year in which the term expires), so that the
term of one class will expire each year. Each Director shall serve during
the term for which he or she was elected or until a successor is duly elected
and qualified and nothing in this Amended and Restated Charter and Articles
of Incorporation shall be interpreted to prevent a Director whose term is
expiring from being eligible for re-election.
ARTICLE VIII
The annual meeting of the Company shall be held at the office of the
Company in the City of St. Louis, State of Missouri, on the fourth Thursday
in April in each year or at such other place as may be selected by the Board
of Directors and shall be held at such time as shall be selected by the Board
of Directors or as provided in the By-laws of the Company. Special meetings
of the Company shall be called at any time by the vote of a majority of the
entire number of the members of the Board of Directors, or upon the written
request of five percent of those shareholders of
<PAGE> 4
the Company eligible to vote at such meeting, which request shall specify the
matters proposed to be acted upon. Notice of any annual or special meeting
shall be given in the manner provided in the By-laws.
Each outstanding share of stock shall be entitled to one vote upon each
matter submitted to a vote at any annual or special meeting of the Company.
On all propositions which shall be submitted for decision at any annual or
special meeting of the Company, such matter shall be decided by the vote of
the majority of the shares voting at such meeting.
ARTICLE IX
The policyholders of the Company shall benefit in the earnings and
profits of the Company in such manner as shall be determined from time to
time by the Board of Directors under the laws of the State of Missouri, and
particularly Section 376.360 R.S.Mo. and all Acts amendatory thereof. Any
allocation of earnings and profits as made by the Board of Directors pursuant
to the provisions of this Article shall be binding and conclusive upon every
person who is entitled to share in its profits or earnings.
ARTICLE X
This Amended and Restated Charter and Articles of Incorporation may be
amended at any annual or special meeting of the Company by the majority vote
of the shareholders voting at such meeting; provided that if it is proposed
to amend the same at any special meeting a copy of the proposed amendment and
a copy of the notice of the meeting of the shareholders of the Company called
for that purpose shall be mailed at least ten (10) days before such meeting
to each shareholder as the shareholder's address appears upon the books of
the Company.
If it be proposed to amend Articles IV, V, IX and X of this Amended and
Restated Charter and Articles of Incorporation at any meeting, annual or
otherwise, then the notice and a copy of the proposed amendment, provided in
the preceding paragraph, shall be mailed at least thirty (30) days before
such meeting and a true and correct list of the shareholders of the Company,
together with the address of each as shown on the books and records of the
Company, shall be filed with the Director of the Department of Insurance of
the State of Missouri at least twenty (20) days before such meeting.
<PAGE> 5
ARTICLE XI
Whenever in this Amended and Restated Charter and Articles of
Incorporation notice is required or permitted to be given by mail, the
affidavit of the person who mailed such notice, filed with the Secretary of
the Company, shall constitute conclusive evidence that such notice has been
given and mailed.
ARTICLE XII: INDEMNIFICATION
The Company shall indemnify each of its directors, officers, employees,
and agents to the full extent specified by Section 351.355 R.S.Mo., as
amended from time to time (the "Indemnification Statute"), and, in addition,
shall indemnify each of them against all expenses (including, without
limitation, attorneys' fees, judgments, fines, taxes, and amounts paid in
settlement) actually and reasonably incurred by him or her in connection with
any claim (including, without limitation, any threatened, pending, or
completed action, suit, or proceeding whether civil, criminal,
administrative, or investigative and whether or not by or in the right of any
corporation) by reason of the fact that he or she is or was serving the
Company or at the request of the Company in any of the capacities referred to
in the Indemnification Statute or arising out of his or her status in any
such capacity, provided that the Company shall not indemnify any person from
or on account of such person's conduct which was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct.
The Company is authorized to give or supplement any of the aforesaid
indemnifications by By-law, agreement, or otherwise and support them by
insurance to the extent it deems appropriate. Amounts to be paid under this
Article XII shall be disbursed at such times and upon such procedures as the
Company shall determine. All such indemnification shall continue as to any
person who has ceased to serve in any of the aforesaid capacities and shall
inure to the benefit of the heirs, devisees, and personal representatives of
such person. Indemnification given under this Article XII shall survive
elimination or modification of this Article XII with respect to any such
expenses incurred in connection with claims arising out of acts or omissions
occurring prior to such elimination or modification and persons to whom such
indemnification is given shall be entitled to rely on such indemnification as
a contract with the Company.
Originally filed 2/21/97
Amended 9/10/97 (Article IV, paragraph 2)
<PAGE> 1
Exhibit #2
AMENDED AND RESTATED BY-LAWS
of
GENERAL AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
Shareholders
Section 1. Annual Meeting. The annual meeting of the Company shall be
--------------
held on the fourth Thursday in April in each year, if not a legal holiday,
and if a legal holiday, then on the next day not a legal holiday, when
members of the Board of Directors shall be elected to succeed those whose
terms are then expiring and such other business shall be transacted as may
properly be brought before the meeting.
Section 2. Special Meetings. Special meetings of the Company may be
----------------
called at any time by the vote of a majority of the entire number of the
members of the Board of Directors. Business transacted at all special
meetings of the Company shall be confined to the purpose or purposes stated
in the notice of the meeting.
Section 3. Place and Hour of Meeting. Every annual meeting of the
-------------------------
Company shall commence immediately after the annual meeting of the members of
General American Mutual Holding Company shall have been concluded. Every
special meeting of the Company shall be held at such time as may be selected
by the Board of Directors. Every meeting of the Company, whether an annual
or a special meeting, shall be continued during at least three hours, unless
the object for which it was called shall be accomplished sooner and shall be
held at the office of the Company in the City of St. Louis, in the State of
Missouri, or at such other place as may be selected by the Board of
Directors.
Section 4. Notice of Meetings; Record Date. Notice of each meeting of
-------------------------------
the Company shall be mailed to each shareholder of the Company not less than
ten nor more than fifty days previous to such meeting, and every such notice
shall state the day and hour and the place at which the meeting is to be held
and, in the case of any special meeting, shall indicate briefly the purpose
or purposes thereof. The Board of Directors of the Company shall have the
power to close the transfer books of the Company for a period not exceeding
seventy days preceding the date of any meeting of shareholders or the date of
payment of any dividend or the date for the allotment of rights or the date
when any change
<PAGE> 2
or conversion or exchange of shares goes into effect. In lieu, however, of
closing the stock transfer books, the Board of Directors may fix in advance a
date, not exceeding seventy days preceding the dates of the aforenamed
occurrences, as a record date for the determination of the shareholders entitled
to notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of shares. In such case, such shareholders, and only such shareholders
as are shareholders of the Company of record on the date of closing the transfer
books or on the record date so fixed, are entitled to notice of, and to vote at,
such meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
Company after such date of closing of the transfer books or such record date so
fixed. If the Board of Directors shall not close the transfer books or set a
record date for the determination of the shareholders entitled to notice of, and
to vote at, a meeting of shareholders, only the shareholders who are
shareholders of record at the close of business on the 20th day preceding the
date of the meeting are entitled to notice of, and to vote at, the meeting
and any adjournment of the meeting.
Section 5. List of Voters. A complete list of all shareholders
--------------
entitled to vote at any annual and special meeting of the Company's
shareholders is to be compiled at least ten days before such meeting by the
officer or agent having charge of the transfer books for shares of stock of
the Company. Such list is to be compiled in alphabetical order with the
address and the number of shares held by each shareholder. The list must be
kept on file in the registered office of the Company for a period of at least
ten days prior to such meeting and must be open to inspection by any
shareholder for such period during usual business hours. Such list must also
be present and kept open at the time and place of such meeting and is subject
to the inspection of any shareholder during such meeting. The original share
ledger or transfer book, or a duplicate thereof kept in Missouri, is prima
facie evidence as to who are the shareholders of the Company entitled to
examine such list or share ledger or transfer book, or to vote at any meeting
of shareholders. Failure to comply with the requirements of this section
does not affect the validity of any action taken at such meeting.
Section 6. Quorum. A majority of the outstanding shares entitled to
------
notice of and to vote at a meeting, present in person
<PAGE> 3
or by proxy conforming to Section 9 of this Article I, shall constitute a quorum
for the transaction of any business coming before any regular or special meeting
of the Company duly and properly called, except as provided by law, the Amended
and Restated Charter and Articles of Incorporation of the Company, or these
By-Laws. If, however, such quorum of shareholders shall not be present or
represented at any meeting of the Company, the shareholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
requisite number of shareholders shall be present. At any such adjourned
meeting at which the requisite number of shareholders shall be represented
any business may be transacted which might have been transacted at the
meeting as originally notified.
Section 7. Voting Rights. Each outstanding share of stock shall be
-------------
entitled to one vote upon each matter submitted to a vote at any annual or
special meeting of the Company.
Section 8. Inspectors of Election. At every meeting of the Company,
----------------------
the President shall appoint not less than two persons, who are not Directors,
inspectors to receive and canvass the votes given at the meeting, and certify
the result to him. At the next meeting of the Board of Directors held
thereafter, the President shall lay before the Board the returns so
certified, and thereupon such proceedings shall be had as the subject-matter
decided by the election or the vote may require. Each such inspector, before
he shall enter on the duties of his office, shall take and subscribe the
following oath before any officer authorized by law to administer oaths: "I
do solemnly swear that I will execute the duties of an inspector of the
election now to be held with strict impartiality and according to the best of
my ability."
Section 9. Voting by Proxy. Every person legally entitled to vote as
---------------
a shareholder at any election, or on any question relating to the management
or business of the Company may cast such vote by proxy; but said proxy shall
be a shareholder of the Company otherwise entitled to vote, and the authority
to cast such vote shall be in writing and shall state the name of the person
authorized to cast such vote and the date of the meeting at which such vote
shall be cast. In no event shall a proxy be valid for more than one annual
or special meeting, as the case may be.
Section 10. Voting of Shares by Certain Holders.
-----------------------------------
(a) Shares of stock in the name of another corporation, foreign
or domestic, are to be voted by such officer,
<PAGE> 4
agent, or proxy as the bylaws of such corporation may prescribe, or in the
absence of such provision, as the Board of Directors of such corporation may
determine.
(b) Shares of stock in the name of a deceased person are to be
voted by his executor or administrator in person or by proxy.
(c) Shares of stock in the name of a fiduciary, such as
guardian, curator, or trustee are to be voted by such fiduciary either in
person or by proxy provided the books of the Company show the stock to be in
the name of such fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to be voted by
such receiver, and shares held by, or in the control of, a receiver are to be
voted by such receiver without the transfer thereof into his name, if such
voting authority is contained in an appropriate order of the court by which
such receiver was appointed.
(e) Shares of stock which have been pledged are to be voted by
the pledgor until the shares of stock have been transferred into the name of
the pledgee, and thereafter, the pledgee is entitled to vote the shares so
transferred.
Section 11. Informal Action by Unanimous Consent of Shareholders. Any
----------------------------------------------------
action required by law to be taken at a meeting of the shareholders of the
Company, or any action which may be taken at a meeting of the shareholders,
may be taken without a meeting if all of the shareholders entitled to vote
with respect to the subject matter thereof sign written consents that set
forth the action so taken. Such consents have the same force and effect as a
unanimous vote of the shareholders at a meeting duly held, and may be stated
as such in any certificate or document filed with the Secretary of State of
the State of Missouri or any other state in the United States of America or
other Country. The Secretary of the Company shall file such consents with
the minutes of the meetings of the shareholders of the Company.
Section 12. Shareholder Proposals and Director Nominations. (a) All
----------------------------------------------
shareholder proposals and Director nominations that have not been proposed,
adopted, or ratified by the Company's Board of Directors must be submitted by
certified mail to, and received by, the Company's Secretary no later than
sixty (60) days prior to the date of meeting at which the proposal or nomination
is to be voted upon by the shareholders. All such proposals must be
<PAGE> 5
accompanied by: (i) the proponent's name, address, and telephone number;
(ii) a brief narrative that describes in sufficient detail the purpose and
the anticipated costs and benefits of the proposal; and (iii) the financial
interests, if any, of the proponent in the proposal. All such Director
nominations must be accompanied by the nominee's biographical, background,
and related information as required by federal securities laws in the
solicitation of proxies for the election of directors, as if proxies were
being solicited for the election of the nominee under the federal securities
laws. In addition, all such shareholder proposals and Director nominations
must be accompanied by: (i) a list of shareholders that have signed written
consents in support of the proposal or Director nomination; (ii) an affidavit
attesting that the list of shareholders is accurate and that each person on
the list has submitted a signed written consent in favor of the proposal or
nomination; and (iii) copies of the written consents. The list must contain
at least five percent (5%) of the shares eligible to vote on the proposal or
nomination. The Secretary shall examine the list and written consents in
order to satisfy himself or herself of the validity and level of shareholder
support. If the Secretary determines that the proposal or nomination is
supported by less than five percent (5%) of the Company's shares eligible to
vote, then this requirement will not be met.
(b) All costs associated with complying with this Section 12 of
the Bylaws shall be borne by the proponent of the proposal or nomination.
Shareholder proposals and Director nominations that have not been proposed,
adopted, or ratified by the Company's Board of Directors, and that fail to
comply fully with each of the requirements set forth in this Section 12 of
the Bylaws shall be considered void and of no effect, and shall not be
presented to the shareholders for consideration or vote.
ARTICLE II
Board of Directors
Section 1. Number and Term of Office. The property and the business
-------------------------
of the Company shall be managed by its Board of Directors, at least nine and
not more than fifteen in number, at least one of whom shall be a citizen and
resident of the State of Missouri. Directors will be elected by class so as
to equalize as nearly as possible the number in each class of Directors.
There shall be three classes of Directors, each class serving for a three
year term expiring one year after expiration of the term of the immediately
preceding class (effective at the annual meeting of the Company for the year
in which the term expires), so that
<PAGE> 6
the term of one class will expire each year. All Directors shall serve during
the term for which they were elected or until their successors are duly elected
and qualified, except that if any Director shall fail to attend at least two
meetings (either regular or special) of the Board of Directors during a calendar
year, he may be deemed to have resigned as a Director effective on December 31
of such year, and the vacancy so created shall be filled by the Board of
Directors in the manner provided in Section 2 of Article II of these By-Laws.
Nothing in these By-Laws shall be interpreted to prevent a Director or Officer
whose term is expiring from being eligible for re-election or reappointment.
Section 2. Filling of Vacancies. Vacancies in the Board of Directors
--------------------
when not filled by shareholders may be filled by the Directors, as provided
for in Article VI of the Amended and Restated Charter and Articles of
Incorporation. Vacancies occasioned by death, resignation, or
disqualification, when filled, shall be filled for the unexpired term for
which such Director was elected. Any Director elected by the Board to fill
such a vacancy shall have the same qualifications required of the Director
whose seat he fills.
Section 3. Place of Meeting, etc. The Board of Directors may hold
---------------------
their meetings and have one or more offices, and keep the books of the
Company, except as otherwise required by law, at the office of the Company,
in the City of St. Louis, Missouri, or at such other place or places as they
may from time to time by resolution determine.
Section 4. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held on the Thursday following the fourth Tuesday of
January, on the fourth Thursday of February, April, July, October, and on the
third Thursday of December in each year and shall commence immediately after
the meeting of the Board of Directors of General American Mutual Holding
Company shall have been concluded, or at such time or times of day as the
Board may determine.
Section 5. Special Meetings. Special meetings of the Board of
----------------
Directors may be called by the President on three days' notice to each
Director specifying the time and place of such meeting, which notice may be
given, either personally or by mail or by facsimile addressed to the
Director; and shall be called by the Secretary in like manner and on like
notice on the written request of any five Directors. Every special meeting
shall be held either at the office of the Company in the City of St. Louis,
Missouri,
<PAGE> 7
or at some other place which shall have been previously designated by resolution
of the Board as one of the places at which special meetings of the Board may be
held. Except as herein otherwise provided, or unless otherwise indicated in the
notice thereof, any business may be transacted at any special meeting, and any
business may be transacted at any meeting at which every Director shall be
present, even though without any notice.
Section 6. Quorum. At all meetings of the Board of Directors, a
------
majority of the Directors then in office shall be necessary and sufficient to
constitute a quorum for the transaction of business, but if, at any meeting,
less than a quorum shall be present, a majority of those present may adjourn
the meeting from time to time, and the act of a majority of the Directors
present at any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically provided by
statute or by the Amended and Restated Charter and Articles of Incorporation
of the Company or by these By-laws.
Section 7. Compensation of Directors. Members of the Board of
-------------------------
Directors, who are not salaried officers of the Company, shall receive such
annual compensation as shall be fixed from time to time by resolution of the
Board of Directors; and, in addition, the Directors who are not salaried
officers of the Company shall receive a sum in such amount as shall be fixed
from time to time by resolution of the Board of Directors, and the expenses
of attendance, if any, for attendance at each regular or special meeting of
the Board, whether or not an adjournment be had because of the absence of a
quorum.
Section 8. Action by Unanimous Consent of Directors. If all the
----------------------------------------
Directors severally or collectively consent in writing to any action taken or
to be taken by the Directors, such consents have the same force and effect as
a unanimous vote of the Directors at a meeting duly held, and may be stated
as such in any certificate or document filed with the Secretary of State of
the State of Missouri or any other state in the United States of America or
other Country. The Secretary of the Company shall file such consents with
the minutes of the meetings of the Board of Directors.
<PAGE> 8
ARTICLE III
Executive Committee; Other Committees
Section 1. Executive Committee, Powers. The Chief Executive Officer
---------------------------
of the Company may, subject to the approval of the Board of Directors,
appoint an Executive Committee to consist of himself, the President of the
Company, whether or not he is the Chief Executive Officer, the elected
Chairman of the Executive Committee, if any, and five other Directors. The
Committee shall have and exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the Company, and
the action of the Chief Executive Officer and any three other members of said
Committee shall for all purposes be and be deemed to be the action of the
Executive Committee whether or not the other members thereof shall have had
notice of such action or of the meeting at which such action shall have been
taken.
The Chief Executive Officer may, for the purpose of completing a
quorum, or to obtain the benefit of the advice and judgment of any Director
or Directors, invite any Director or Directors not a member or members of the
Executive Committee to attend any meeting of the Committee and each Director
so invited shall at such meeting have all the powers and authority of a
member of the Committee, including the right to vote.
Section 2. Term of Office. The members of the Executive Committee
--------------
shall hold office until the meeting of the Board of Directors next following
the annual meeting of the Company after their appointment, and until their
successors are appointed, but any member of the Executive Committee ceasing
to be a Director shall forthwith cease to be a member of the Executive
Committee, and all or any of the members of the Executive Committee may be
removed at any time by a majority vote of the Board of Directors.
Section 3. Organization. The Chairman of the Executive Committee, if
------------
any, shall preside at its meetings but in the absence of the Chairman of the
Executive Committee, the President shall preside. In all other matters the
Executive Committee shall fix its own rules of procedure and shall meet where
and as provided by such rules.
Section 4. Quorum. At all meetings of the Executive Committee four
------
Directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the affirmative vote of four of the regular or
acting members of the Committee in all cases shall be necessary for its
adoption of any
<PAGE> 9
resolution. Any resolution adopted by the affirmative vote of a majority of the
regular or acting members of the Executive Committee and any action taken by
such majority shall for all purposes be deemed to be the act of said Committee,
whether or not such vote be had or action taken at a meeting duly called and
held in conformity with these By-laws or with any rules of procedure adopted by
the Committee.
Section 5. Contracts. Any member of the Executive Committee, or of
---------
any other Committee of the Board of Directors, individually, may be a party
to, or may be interested in any contract or transaction of the Company;
provided that such contract or transaction shall be approved or ratified by
the affirmative vote of a majority of the members of such Committee not so
interested (if such majority shall be sufficient to constitute a quorum); and
no such Committee member shall be liable or responsible on account of such
contract or transaction, but the mere ownership of stock in another
corporation by any Director (whether or not a member of the Executive
Committee or of any other Committee of the Board of Directors), shall not
disqualify him to vote as a Director, or as a member of said Committee, in
respect of any transaction between the Company and such other corporation.
Section 6. Minutes. The minutes of all proceedings of the Executive
-------
Committee shall be entered in a book kept for that purpose.
Section 7. Other Committees. The Chief Executive Officer of the
----------------
Company may appoint a Compensation Committee to consist of himself and not
less than two other officers of the Company which, to the extent provided by
resolution or resolutions passed by a majority of the Board of Directors,
shall have and exercise the powers of the Board of Directors in compensation
matters. Further, the Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of three or more of the Directors of the Company
which, to the extent provided in said resolution or resolutions, shall have
and may exercise the powers of the Board of Directors in the management of
the business and affairs of the Company and may have power to authorize the
seal of the Company to be affixed to all papers which may require it. Each
such committee shall have such name as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 8. Compensation. Members of the Executive Committee, who are
------------
not salaried officers of the Company, shall
<PAGE> 10
receive such annual compensation as shall be fixed from time to time by
resolution of the Board of Directors; and members of the Executive Committee,
and of any other committee or committees of the Board of Directors, including
Directors invited by the Chairman or President to sit thereon at any meeting,
except salaried officers of the Company, may be allowed such additional sum, and
the expenses of attendance, if any, as shall be fixed from time to time by
resolution of the Board of Directors for attendance at each meeting of any
committee specified in any such resolution, whether or not an adjournment be had
because of the absence of a quorum.
ARTICLE IV
Advisory Council
Section 1. Advisory Council. Subject to the approval of the Board of
----------------
Directors, the President may appoint annually an Advisory Council to consist
of not more than five members.
Section 2. Term. The members of the Advisory Council shall be
----
appointed for a term of not to exceed one year, the term expiring on the date
of each annual meeting, and all or any of the members of the Advisory Council
may be removed at any time by a majority vote of the Board of Directors.
Section 3. Organization. The Board of Directors shall each year
------------
select a Chairman of the Advisory Council; otherwise the Advisory Council
shall fix its own rules of procedure and shall meet where and as provided by
such rules.
Section 4. Duties. The duties and functions of the Advisory Council
------
shall be advisory only, the purpose of such Council being to secure the
advice of capable and competent people interested in the Company and its
affairs for the benefit of the Board of Directors and officers of the Company
in transacting the business of the Company.
Section 5. Quorum. At all meetings of the Advisory Council, a
------
majority of those then appointed shall constitute a quorum for the
transaction of business.
Section 6. Chairman. The Chairman of the Advisory Council shall be
--------
invited by the President to attend all meetings of the Board and he shall
receive the same compensation as then prevails as the compensation for
Directors. On the date of his attendance at any such Directors' meeting, if
there be an Executive Committee meeting or meetings, then the Chairman of the
Advisory Council
<PAGE> 11
shall be invited to attend such Executive Committee meeting or meetings and
shall receive such attendance fees as are then provided for the members of the
Executive Committee.
ARTICLE V
Officers
Section 1. Officers. The officers of the Company shall be chosen by
--------
the Board of Directors and shall be a Chairman of the Board, unless the Board
of Directors desires the duties of the Chairman of the Board to devolve upon
the President, a Chairman of the Executive Committee, a President, one or
more Executive Vice-Presidents, as deemed necessary, one or more
Vice-Presidents, a Secretary, one or more Assistant Secretaries, an Actuary,
a Medical Director, General Counsel, Treasurer, and such other officers as
the Board of Directors may deem advisable, who shall have such authority and
perform such duties as from time to time may be prescribed by the Board of
Directors, or, in the event of their failure so to prescribe, then by the
President. The Chairman of the Board, the Chairman of the Executive
Committee and the President shall be chosen from among the Directors and
other officers may, but need not, be Directors. All such officers shall be
elected by the Board of Directors at the regular meeting of the Board held
after each annual meeting of the shareholders. One person may hold more than
one office except that no one person shall hold the offices of President and
Secretary and no one person shall hold the offices of Chairman of the Board
and Secretary.
Section 2. Chairman of the Board. The Chairman of the Board or the
---------------------
President, if it is the desire of the Board of Directors that the duties of
the Chairman of the Board devolve upon him, shall preside at all meetings of
the Board of Directors. The Chairman of the Board shall have such other
duties as may from time to time be provided by a resolution or resolutions of
the Board of Directors and he may be designated as the Chief Executive
Officer of the Company if the Board of Directors shall so determine.
Section 2A. Chairman of the Executive Committee. The Chairman of the
-----------------------------------
Executive Committee, if any, otherwise the President, shall preside at all
meetings of the Executive Committee. In the absence of the Chairman of the
Executive Committee, the President shall preside. The Chairman of the
Executive Committee shall have such other duties as may from time to time be
provided by resolution or resolutions of the Board of Directors.
<PAGE> 12
Section 2B. Chief Executive Officer. Either the Chairman of the Board
-----------------------
of Directors or the President shall be designated the Chief Executive Officer
of the Company and such designation shall be made by the Board of Directors
by a resolution or resolutions adopted from time to time.
The Chief Executive Officer shall have general charge and control of
all of its business and affairs and shall preside at all meetings of the
Company. He shall be exofficio a member of all committees of the Board of
Directors and he shall from time to time secure information concerning the
business and affairs of the Company and shall promptly lay such information
before the Board of Directors or any of its committees authorized for such
purpose.
The Chairman of the Board, when he is the Chief Executive Officer of
the Company, shall exercise all powers and duties otherwise specifically
delegated in these By-laws to the President of the Company, provided that in
the absence of the Chairman of the Board of Directors his duties and
responsibilities as Chief Executive Officer of the Company shall devolve upon
the President, as provided for in Article V, Section 3 of these By-laws,
notwithstanding the provisions of Article V, Section 4 of these By-laws, as
amended, and provided further that the President of the Company, regardless
of whether he is the Chief Executive Officer, the Chairman of the Board, if
he is the Chief Executive Officer, an Executive Vice-President or a
Vice-President may sign contracts with the Secretary in the name of the
Company, as authorized in Article V, Section 6 of these By-laws.
Section 3. President. The President may be designated as the Chief
---------
Executive Officer of the Company if the Board of Directors shall so
determine.
If he is not designated as Chief Executive Officer, the President shall
perform such duties as may from time to time be assigned to him by resolution
of the Board of Directors or of the Executive Committee or by the Chairman of
the Board. In the absence of the Chairman of the Board of Directors his
duties and responsibilities as Chief Executive Officer of the Company shall
devolve upon the President.
Section 4. Executive Vice-Presidents. Each Executive Vice-President
-------------------------
shall perform such duties as may from time to time be assigned to him by
resolution of the Board of Directors or of the Executive Committee or by the
Chief Executive Officer of the Company or by the President of the Company.
In the absence of the
<PAGE> 13
President, his duties should devolve upon the Executive Vice-Presidents.
Section 5. Vice-Presidents. Each Vice-President shall perform such
---------------
duties as may from time to time be assigned to him by resolution of the Board
of Directors or of the Executive Committee or by the President.
Section 6. Secretary. The Secretary shall keep the minutes of all
---------
meetings of the Board of Directors and the minutes of all meetings of the
Company in books provided for that purpose; he shall attend to the giving or
serving of all notices of the Company; he may sign with the President, an
Executive Vice-President, or a Vice-President, in the name of the Company,
all contracts authorized by the Board of Directors or by any Committee of the
Company, having the requisite authority and, when so ordered by the Board of
Directors or such Committee, he shall affix the seal of the Company thereto;
he shall have charge of such books and papers as the Board of Directors or
the Executive Committee shall direct, all of which shall at all reasonable
times be open to the examination of any Director, upon application at the
office of the Company during business hours; and he shall in general perform
all the duties incident to the office of the Secretary, subject to the
control of the Board of Directors, the Executive Committee, the Chairman of
the Board, and the President.
Section 7. Compensation of Officers. The President and the other
------------------------
officers of the Company shall be entitled to receive such compensation for
their services as may from time to time be determined by the Board of
Directors.
Section 8. Removal of Officers. The President, subject to the
-------------------
approval of the Board of Directors, may at any time remove any of the
officers of the Company and the salary of any officer so removed by him shall
cease upon the approval of such removal being given by the Board. Except
where otherwise expressly provided in a contract duly authorized by the Board
of Directors, all officers and agents shall be subject to removal at any time
by the affirmative vote of a majority of the whole Board of Directors, and
all officers, agents, and employees other than officers appointed by the
Board of Directors shall hold office at the discretion of the Committee or of
the officers appointing them.
Section 9. Offices to Be Kept in Missouri. The Chairman of the Board,
------------------------------
when he is the Chief Executive Officer, the President, the Executive
Vice-Presidents, the Treasurer, and the Secretary of the Company shall have
and keep their offices in this State.
<PAGE> 14
Section 10. Other Employees. Except as hereinbefore provided, the
---------------
President shall have full power to appoint, remove, and fix the compensation
of each and every person employed by the Company.
ARTICLE VI
Indemnification of Officers and Directors
Against Liabilities and Expenses
Section 1. Indemnification with Respect to Third Party Actions. The
---------------------------------------------------
Company shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the Company) by reason of the fact that
he is or was a director, officer, employee, or agent of the Company, or is or
was serving at the request of the Company as a director, officer, employee,
partner, trustee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, taxes, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
----
contendere or its equivalent, does not, of itself, create a presumption that
- ----------
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful. Any indemnification under this
Section 1 is to be made by the Company only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee, partner, trustee, or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in this Section 1.
Such determination is to be made (a) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit, or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (c) by the shareholders.
<PAGE> 15
Section 2. Indemnification with Respect to Actions by or in the Right
----------------------------------------------------------
of the Company. The Company shall indemnify any person who was or is a party
- --------------
or is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee,
or agent of the Company, or is or was serving at the request of the Company
as a director, officer, employee, partner, trustee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees), judgments, fines, taxes, and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company. No indemnification, however, shall be made in respect of any claim,
issue or matter as to which such person has been adjudged to be liable for
gross negligence or willful misconduct in the performance of his duty to the
Company unless and only to the extent that the court in which such action or
suit was brought determines upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
deems proper. Any indemnification under this Section 2 (unless ordered by a
court) is to be made by the Company only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee,
partner, trustee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in this Section 2. Such
determination is to be made (a) by the Board of Directors by a majority vote
of a quorum consisting of Directors who were not parties to such action,
suit, or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (c) by the shareholders.
Section 3. Payment of Expenses in Advance of Disposition of Action.
-------------------------------------------------------
Expenses incurred in defending any actual or threatened civil or criminal
action, suit, or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit, or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or
on behalf of the Director, officer, employee, partner, trustee, or agent to
repay such amount if it is ultimately determined that he is not entitled to
be indemnified by the Company as authorized in this Article.
<PAGE> 16
Section 4. Indemnification Provided in This Article Non-Exclusive.
------------------------------------------------------
The indemnification provided by this Article is not exclusive of any other
rights to which one seeking indemnification may be entitled under any By-law,
agreement, vote of shareholders or disinterested Directors, or otherwise,
both as to action in his official capacity while holding such office, and as
to a person who has ceased to be a Director, officer, employee, partner,
trustee, or agent and the indemnification inures to the benefit of the heirs,
executors, and administrators of such a person.
Section 5. Definition of "Company". For the purposes of this Article,
-----------------------
references to the "Company" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving corporation
so that any person who is or was a director, officer, employee, partner,
trustee, or agent of such a constituent corporation or is or was serving at
the request of such constituent corporation as a director, officer, employee,
partner, trustee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise stands in the same position under the
provisions of this Article with respect to the resulting or surviving
corporation in the same capacity.
ARTICLE VII
Miscellaneous Provisions
Section 1. Corporate Seal. The Board of Directors shall provide a
--------------
suitable seal, containing the name of the Company, the year of its
incorporation and the words CORPORATE SEAL, MISSOURI, which seal shall be in
charge of the Secretary. Such seal may from time to time, upon the order of
the Board of Directors, expressed by a resolution of said Board, be used by
causing a facsimile thereof to be impressed, affixed, or reproduced. If and
when so directed by the Board of Directors, a duplicate of the seal may be
kept and be used by any Assistant Secretary or other officer.
Section 2. Fiscal Year. The fiscal year of the Company shall begin on
-----------
the first day of January and terminate on the thirty-first day of December in
each year.
Section 3. Manner of Giving Notice. Whenever under the provisions of
-----------------------
these By-laws notice is required to be given to any Director or shareholder,
it shall not be construed to mean personal notice, but such notice may be
given in writing, by mail, by depositing the same in a postoffice or letter
box, in a post-paid sealed wrapper, addressed to such Director or shareholder
at his address as it appears on the records of the Company, and such
<PAGE> 17
notice shall be deemed to be given at the time when the same shall be thus
mailed. Any shareholder of the Company, Director, officer or committee member
may waive any notice required to be given under these By-laws. Whenever in the
Company's Amended and Restated Charter and Articles of Incorporation or these
By-laws notice is required or permitted to be given by mail, the affidavit of
the person who mailed such notice, filed with the Secretary of the Company,
shall constitute conclusive evidence that such notice has been given and
mailed.
Section 4. Certificates for Shares. The Board of Directors is to
-----------------------
prescribe the form of the certificate of stock of the Company. The
certificate is to be signed by the President or Vice-President and by the
Secretary, Treasurer, or Assistant Secretary or Assistant Treasurer, is to be
sealed with the seal of the Company and is to be numbered consecutively. The
name of the owner of the certificate, the number of shares of stock
represented thereby, and the date of issue are to be recorded on the books of
the Company. Certificates of stock surrendered to the Company for transfer
are to be canceled, and new certificates of stock representing the
transferred shares issued. New stock certificates may be issued to replace
lost, destroyed or mutilated certificates upon such terms and with such
security to the Company as the Board of Directors may require.
Section 5. Transfer of Shares. Shares of stock of the Company may be
------------------
transferred on the books of the Company by the delivery of the certificates
representing such shares to the Company for cancellation, and with an
assignment in writing on the back of the certificate executed by the person
named in the certificates as the owner thereof, or by a written power of
attorney executed for such purpose by such person. The person registered on
the books of the Company as the owner of shares of stock of the Company is
deemed the owner thereof and is entitled to all rights of ownership with
respect to such shares.
Section 6. Transfer Books. Transfer books are to be maintained under
--------------
the direction of the Secretary, showing the ownership and transfer of all
certificates of stock issued by the Company.
Section 7. Construction. Whenever a word in the masculine gender is
------------
used in these By-laws it shall be understood to be in or include the feminine
gender where appropriate under the circumstances. These By-laws are to be
construed to be consistent with applicable law, and if such construction is
not possible then the invalidity of a By-law or a portion thereof shall not
affect
<PAGE> 18
the validity of the remainder of the By-laws, which shall remain in full force
and effect.
ARTICLE VIII
Amendments
These By-laws may be altered, amended or repealed, or new By-laws may
be adopted, by vote of a majority of all of the members of the Board of
Directors then in office, at any regular or special meeting of the Board;
provided, no Bylaw may be adopted or amended so as to be inconsistent with
the Amended and Restated Charter and Articles of Incorporation of the Company
or the Constitution or other laws of the State of Missouri.
Amendments:
- ----------
Article I, Section 12 added by amendment on 1/29/98
<PAGE> 1
Exhibit #3
Gentlemen:
In my capacity as Senior Product Actuary for General American Life Insurance
Company, I have provided actuarial advice concerning a variable life
insurance product funded through General American Life Insurance Company
Separate Account 11.
It is my professional opinion that:
1. The fees and charges deducted under the contract, in the
aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by
the insurance company.
2. The illustrations of cash values, death benefits, and accumulated
premiums in the Appendix to the prospectus contained in the
Registration Statement, are based on the assumptions stated in the
illustration, and are consistent with the provisions of the
Policies. The rate structure of the Policies has not been designed
so as to make the relationship between premium and benefits, as
shown in the illustrations, appear to be more favorable to
prospective purchasers of Policies aged 35 and 50 in the rate class
illustrated than to prospective purchasers of Policies at other
ages.
3. The information contained in the examples set forth in the section
of the prospectus entitled "Death Benefits", is based on the
assumption stated in the examples, and is consistent with the
provision of the Policies.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the heading "Experts"
in the prospectus.
Susan M. Benjamin, FSA, MAAA
Senior Product Actuary
<PAGE> 1
Exhibit #4
GENERAL AMERICAN LIFE INSURANCE COMPANY
DESCRIPTION OF ISSUANCE, TRANSFER
AND REDEMPTION PROCEDURES FOR
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
Pursuant to Rule 6e-3(T)(b)(12)(ii)
and
METHOD OF COMPUTING ADJUSTMENTS IN
PAYMENTS AND CASH VALUES UPON
CONVERSION TO FIXED BENEFIT POLICIES
Pursuant to Rule 6e-3(T)(b)(13)(v)(B)
This document sets forth the administrative procedures that will
be followed by General American Life Insurance Company (the "Company") in
connection with the issuance of two types of Flexible Premium Variable Life
Insurance Policies, a single life policy ("VUL") and a joint and last
survivor policy ("JSVUL"). Each of these policies has a separate version
designed for use in connection with qualified pension plans ("Pension
Policy"). All of the policy forms are referred to collectively as the
"Policies" or "Policy." This document also addresses the transfer of assets
held under the Policies and the redemption by Owners of their interests in
such Policies, and explains the method that the Company will follow in making
a cash adjustment when a Policy is exchanged for a fixed benefit insurance
policy pursuant to Rule 6e-3(T)(b)(13)(v)(B).
I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF POLICIES
A. Premium Payments and Underwriting
Premiums for the Policies will not be the same for all owners of
Policies ("Owners"). The Company must receive an initial premium, together
with a completed application, before a Policy will be issued. The Company
requires that the initial premium for a Policy be at least equal to 1/12 of a
specified annual minimum premium
Following the initial premium, subject to the limitations
described below, premiums may be paid in any amount and at any interval. An
Owner may establish a schedule of planned premiums, which will be billed by
the Company at regular
<PAGE> 2
intervals. For the first Policy year, the amount of the planned premiums can be
no less than the minimum annual premium. Failure to pay planned premiums,
however, will not itself cause the Policy to lapse.
An Owner may elect to pay premiums by means of a pre-authorized
check ("PAC") procedure. Under a PAC procedure, amounts will be deducted
each month, generally on the monthly anniversary, from the Owner's checking
account and applied as a premium under a Policy. The minimum payment
permitted under a PAC procedure is $10.
An Owner may make unscheduled premium payments at any time in any
amount, or skip planned premium payments, subject to the following
limitations. Every premium payment must be at least $10. In no event may
the total of all premiums paid in any Policy year exceed the current maximum
premium limitations for that year established by Federal tax laws. The
maximum premium limit for a Policy year is the largest amount of premium that
can be paid in that Policy year such that the sum of the premiums paid under
the Policy will not at any time exceed the guideline premium limitations
referred to in section 7702(c) of the Internal Revenue Code of 1986, as
amended, or any successor provision. If at any time a premium is paid which
would result in total premiums exceeding the current maximum premium
limitation, the Company will only accept that portion of the premium which
will make total premiums equal the maximum. Any part of the premium in
excess of that amount will be returned or applied as otherwise agreed and no
further premiums will be accepted until allowed by the current maximum
premium limitations prescribed by Federal tax law. The Company may require
additional evidence of insurability if any premium payment would cause an
increase in the Policy's death benefit exceeding the premium received.
A Policy will remain in force so long as the cash surrender value
is sufficient to pay the monthly deduction. Thus, the amount of a premium,
if any, that must be paid to keep the Policy in force depends upon the cash
value of the Policy, which in turn depends on such factors as the investment
experience and the cost of insurance charge. The cost of insurance rate
utilized in computing the cost of insurance charge will not be the same for
each insured. The chief reason is that the principle of pooling and
distribution of mortality risks is based on the assumption that each insured
incurs an insurance rate commensurate with his or her mortality risk. That
risk is actuarially determined based on such factors as attained age, sex
<PAGE> 3
(except under Policies sold in Montana and under the Pension Policy), and
rate class. Accordingly, while not all insureds will be subject to the same
cost of insurance rate, there will be a single "rate" for all insureds in a
given actuarial category.
The Company will determine current cost of insurance rates based
upon expectations as to future mortality experience. The cost of insurance
rates are guaranteed not to exceed rates based upon the Commissioners' 1980
Standard Ordinary Mortality Tables.
The Policies will be offered and sold pursuant to established
underwriting standards and in accordance with state insurance laws. State
insurance laws may prohibit unfair discrimination among insureds but
recognize that premiums may be based upon factors such as age, sex, health,
and occupation.
B. Application and Initial Premium Processing
Upon receipt of a completed application, the Company will follow
certain insurance underwriting (i.e., evaluation of risks) procedures designed
to determine whether the applicant is insurable. This process may involve such
verification procedures as medical examinations and may require that further
information be provided by the proposed insured before a determination can be
made. A Policy will not be issued until the underwriting procedure has been
completed.
Insurance coverage under a Policy will begin on the issue date,
which is the date as of which the Policy is delivered and the initial premium
has been received prior to the insured's death and prior to any change in
health as shown in the application. The issue date is used to determine
Policy anniversaries, Policy years and Policy months.
After the issue date the Company will allocate the net premium
received during the "right to examine policy period" to the division of the
General American Life Insurance Company Separate Account Eleven (the
"Separate Account") that invests in the Money Market Fund of General American
Capital Company. Upon expiration of this period, the cash value in that
division will be transferred to the divisions of the Separate Account and to
the Company's General Account in accordance with the Owner's allocation
instructions.
The minimum face amount at issue is $50,000 for VUL Policies and
$100,000 for JSVUL Policies.
<PAGE> 4
C. Reinstatement Procedures
The Policy may be reinstated within five years after lapse and
during the lifetime of the person(s) insured under the Policy unless the
Policy has been surrendered. A Policy will be reinstated upon receipt by the
Company of a written application for reinstatement, production of evidence of
insurability satisfactory to the Company and payment of sufficient premium to
cover the monthly deductions due at the time of lapse, and two times the
monthly deduction due at the time of reinstatement. Any indebtedness must
also be paid or reinstated.
The amount of cash value on the date of reinstatement will be
equal to the amount of any loan reinstated, increased by the net premiums
paid at reinstatement, any loans paid at the time of reinstatement, and the
amount of any surrender charge paid at the time of lapse to the extent of the
face amount reinstated. The effective date of reinstatement will be the date
of approval by the Company of the application for reinstatement. There will
be a full monthly deduction for the Policy month that includes that date.
The surrender charge in effect at the time of reinstatement will equal the
surrender charge in effect at the time of lapse. If only a portion of the
coverage is reinstated, then only the prorated portion of the surrender
charge will be reinstated. The cash value following reinstatement will be
increased by the amount of the surrender charge imposed at the time of lapse,
to the extent of the surrender charge reinstated.
II. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
Set forth below is a summary of the principal Policy provisions
and administrative procedures which might be deemed to constitute, either
directly or indirectly, a "redemption" transaction. The summary shows that
because of the insurance nature of the policies, the procedures involved
necessarily differ in certain significant respects from the redemption
procedures for mutual funds and contractual plans.
A. Surrenders and Partial Withdrawals
At any time during the lifetime of the insured and while a Policy
is in effect, the Owner may surrender, or make a partial withdrawal under,
the Policy by sending a written request to the Company. The amount available
for surrender is the cash surrender value at the end of the valuation period
during which the surrender request is received at the Company's home office.
<PAGE> 5
Amounts payable from the Separate Account upon surrender or a partial
withdrawal will ordinarily be paid within seven days of receipt of the
written request.
If the Policy is being surrendered, the Policy itself must be
returned to the Company along with the request. Upon surrender, the Company
will pay the cash surrender value (the cash value less any indebtedness and
less any surrender charge), increased by the cash value of any paid-up
additions, dividends due and dividend accumulations (if any), and any unpaid
accrued interest. Surrender proceeds may be paid in a single sum or under
one of the settlement options. Coverage under a Policy will terminate as of
the date of surrender.
After the first Policy year, an Owner may make up to twelve
partial withdrawals or fund transfers each Policy year from the Separate
Account or the General Account at no charge. The Company may impose a charge
not to exceed $25 for any partial withdrawal or transfer in excess of twelve
in a Policy year. The minimum amount of a partial withdrawal request, net of
any applicable surrender charges, must be at least $500 from a division, or
the Policy's cash value in a division, if smaller. The maximum amount that
may be withdrawn from a division is the Policy's cash value in that division.
The Owner may allocate the amount withdrawn, subject to the above
conditions, among the divisions of the Separate Account and the General
Account. If no allocation is specified, then the partial withdrawal will be
allocated among the divisions of the Separate Account and the General Account
in the same proportion that the Policy's cash value in each division and the
General Account bears to the total cash value of the Policy, less the cash
value in the Loan Account, on the date the request for the partial withdrawal
is received.
Generally, any surrender charge imposed in connection with a
partial withdrawal will be allocated among the divisions of the Separate
Account and the General Account in the same proportion as the partial
withdrawal is allocated. An Owner may request, however, that a surrender
charge applicable to an amount withdrawn from a division be paid from the
cash value in another division. No amount may be withdrawn that would result
in there being insufficient cash value to meet any surrender charge that
would be payable immediately following the withdrawal upon the surrender of
the remaining cash value.
The death benefit will be affected by a partial
<PAGE> 6
withdrawal, unless Death Benefit Option A or Option C is in effect and the
withdrawal is made under the terms of an Anniversary Partial Withdrawal Rider.
If Option A is in effect and the death benefit equals the face amount, then a
partial withdrawal will decrease the face amount by an amount equal to the
partial withdrawal plus the applicable surrender charge resulting from the
change in face amount. If the death benefit is based on a percentage of the
cash value, then a partial withdrawal will decrease the face amount by the
amount by which the partial withdrawal plus the applicable surrender charge
exceeds the difference between the death benefit and the face amount. If Option
B is in effect, the face amount will not change.
The face amount remaining in force after a partial withdrawal may
not be less than $50,000 for a VUL Policy, or $100,000 for a JSVUL Policy.
Any request for a partial withdrawal that would reduce the face amount below
these amounts will not be implemented. Partial withdrawals will be applied
first to reduce the initial face amount and then, in the case of a VUL
Policy, to each increase in face amount in order, starting with the first
increase. (The face amount of a JSVUL Policy may not be increased.)
If a Policy is surrendered, the surrender charge will be 45% of
one annual Target Premium on the base policy. The charge remains level over
the first five Policy years and then gradually decreases to zero (0) at the
end of ten Policy years. Additional surrender charges will be deducted if
the Policy is surrendered following one or more increases in face amount of a
VUL Policy. The surrender charge applicable to each increase will be 45% of
the Target Premium for that increase. The surrender charge applicable to an
increase in face amount of a VUL Policy remains level for the first five
Policy years that the increase is in effect, then gradually decreases to zero
at the end of ten Policy years. (The face amount of a JSVUL Policy may not
be increased.)
A surrender charge also will apply to any decrease in face
amount. The amount of the surrender charge assessed because of a decrease in
face amount is a portion of the surrender charge that would be deducted upon
surrender or lapse. The portion is based on the relationship between the
decrease in face amount and face amount before the decrease.
<PAGE> 7
B. Changes in Face Amount
An Owner may increase or decrease the face amount of a Policy
(without changing the death benefit option) once each Policy year after the
first Policy anniversary. A written request is required for a change in the
face amount. Any change is subject to the following conditions:
1. Any decrease will become effective on the monthly anniversary on
or next following receipt of the written request.
2. The minimum decrease allowed is $5,000, and the face amount may
not be decreased below $50,000 for a VUL Policy or $100,000 for a JSVUL
Policy. If, following the decrease in face amount, the Policy would
not comply with maximum premium limitations required by Federal tax
law, the decrease may be limited or cash value may be returned to the
Owner, at his or her election, to the extent necessary to meet these
requirements.
Any decrease will reduce the face amount in the following order:
a. The face amount provided by the most recent increase (VUL
Policies only);
b. The next most recent increases successively (VUL Policies
only); and
c. The initial face amount.
3. For an increase in the face amount of a VUL Policy, the Company
requires that a written request for the increase and satisfactory
evidence of insurability be submitted. If approved, the increase will
become effective as of the monthly anniversary coinciding with or next
following the approval. In addition, the insured must have an attained
age of not greater than 85 (70 for Pension Policies) on the effective
date of the increase. The increase may not be less than $5,000 ($2,000
under the Pension Policy).
C. Change in Death Benefit Option
After the first Policy anniversary, the Owner may request in
writing to change the death benefit option. If the
<PAGE> 8
request is to change from Option A to Option B, the face amount will be
decreased by the amount of the cash value. Evidence of insurability
satisfactory to the Company will be required on a change from Option A to Option
B. This change cannot be made if it would result in a face amount of less than
$50,000, or $100,000 for a JSVUL Policy. If the request is to change from
Option B to Option A, the face amount will be increased by the amount of the
cash value. The effective date of a change will be the monthly anniversary on
or following the date the request for change is received by the Company. The
option may be changed once each Policy year.
D. Benefit Claims
While the Policy remains in force, the Company will pay a death
benefit to the named beneficiary in accordance with the designated death
benefit option within seven days after receipt in its home office of due
proof of death of the insured under a VUL Policy, or the death of both
insureds under a JSVUL Policy. Payment of death benefits may be postponed
under certain circumstances, such as the New York Stock Exchange being closed
for reasons other than customary weekend and holiday closings.
The amount of the death benefit is determined at the end of the
valuation period during which the insured under a VUL Policy or the last
insured under a JSVUL Policy dies. The amount of the death benefit will
never be less than the current face amount of the Policy as long as the
Policy remains in force and as long as the insured (or the younger insured in
the case of a JSVUL policy) has not yet reached attained age 100. The
proceeds will be reduced by any outstanding indebtedness. The proceeds will
be increased by any paid-up additions to the Policy, dividend accumulations
and dividends due (if any), and the amount of the monthly cost of insurance
for the portion of the month from the date of death to the end of the month.
The death benefit may exceed the face amount of the Policy depending on the
death benefit option in effect, the cash value of the Policy and the
applicable percentage in effect at the date of death. Under Option A, the
death benefit is the greater of the face amount or the cash value on the date
of death multiplied by the applicable percentage. Under Death Benefit Option
B, the death benefit is equal to the face amount plus the cash value on the
date of death or, if greater, the applicable percentage (as per Option A) of
the cash value on the date of death.
If the insured is living on the date on which the insured reaches
attained age 100 (or, in the case of a JSVUL
<PAGE> 9
policy, on the date on which the younger insured reaches attained age 100), the
death benefit will be equal to 101% of the accumulated cash value of the Policy.
By addition of and compliance with the terms of the Lifetime Coverage Rider, the
Owner may maintain the death benefit beyond age 100 at the greater of the face
amount or 101% of the cash value.
Death benefit proceeds may be paid in a single sum, or under one
of the settlement options described in the Policy. The election may be made
by the Owner during the insured's lifetime, or, if no election is in effect
at death, by the beneficiary. An option is available only if the proceeds to
be applied are $5,000 or more. The settlement options are subject to the
restrictions and limitations set forth in the Policy.
E. Policy Loans
The Owner may, by written request to the Company, borrow an
amount up to the loan value of the Policy, with the Policy serving as sole
security for such loan. The loan value is equal to the cash value of the
Policy on the date the Policy loan is requested, increased by interest
expected to be earned on the loan balance to the next Policy anniversary, and
reduced by interest on the borrowed amount to the next Policy anniversary,
the amount of any existing loans and interest on those loans, any surrender
charges, and any anticipated monthly deductions to the next Policy
anniversary charges. The minimum amount that may be borrowed is $500. Any
amount due to an Owner under a loan ordinarily will be paid within seven days
after the Company receives a loan request at its home office, although
payments may be postponed under certain circumstances.
When a loan is made, cash value equal to the amount of the loan
plus the interest due on the borrowed amount to the next Policy anniversary
will be transferred to the "Loan Account" (part of the General Account) as
security for the loan. Unless the Owner requests a different allocation,
amounts will be transferred from the divisions of the Separate Account and
the General Account in the same proportion that the Policy's cash value in
each division and the General Account, if any, bears to the total cash value,
less the cash value in the Loan Account. Cash value transferred to the Loan
Account will earn interest daily at a minimum annual rate of at least 4%.
The interest rate charged on loans will be 4.5% during the first ten Policy
years and 4.25% thereafter.
A Policy loan may be repaid in whole or in part at any
<PAGE> 10
time prior to the death of the insured (or the last insured under a JSVUL
Policy) and as long as a Policy is in effect. When a loan repayment is made, an
amount securing the indebtedness in the Loan Account equal to the loan repayment
will be transferred to the divisions of the Separate Account and the General
Account in the same proportion that cash value in the Loan Account bears to
the cash value in each Loan Subaccount.
III. TRANSFERS
The Separate Account currently has twenty-four divisions. Under
the Company's current rules, a Policy's cash value, except amounts credited
to the Loan Account, may be transferred among the divisions of the Separate
Account and between the General Account and the divisions. Requests for
transfers from or among divisions of the Separate Account may be made up to
twelve times in a Policy year at no charge. The company reserves the right
to charge a fee not to exceed $25 for transfers or partial withdrawals in
excess of twelve in a Policy year. Transfers must be in amounts of at least
$500 or, if smaller, the Policy's cash value in a division. The Company will
make transfers and determine all values in connection with transfers as of
the end of the valuation period during which the transfer request is
received.
The Company currently intends to continue to permit transfers for
the foreseeable future. The Policy provides that the Company may at any time
revoke or modify the transfer privilege, including the minimum amount
transferable.
IV. REFUNDS
A. Right to Examine Policy Period
An Owner may cancel a Policy within the latest of 20 days after
receiving it, 45 days after the application was signed, or 10 days of mailing
a notice of the cancellation right (or such longer time as may be required by
law). If a Policy is cancelled within this time period a refund will be
paid. The refund will equal all premiums paid under the Policy.
To cancel the Policy, the Owner must mail or deliver the Policy
to either the Company or the agent who sold it. A refund of premiums paid by
check may be delayed until the check has cleared the Owner's bank.
A request for an increase in Face Amount of a VUL
<PAGE> 11
Policy may also be cancelled. The request for cancellation must be paid within
the latest of 20 days from the date the Owner received the new Policy
specifications page for the increase, 45 days after the application for the
increase was signed, or 10 days of mailing the right to cancellation notice (or
such longer time as may be required by law).
Upon cancellation of an increase, the Owner may request that the
Company refund the amount of the additional charges deducted in connection
with the increase. This will equal the amount by which the monthly
deductions since the increase went into effect exceeded the monthly
deductions that would have been made absent the increase.
If no request is made, the Company will increase the Policy's
cash value by the amount of these additional charges. This amount will be
allocated among the divisions of the Separate Account and the General Account
in the same manner as it was deducted.
B. Suicide
In the event the insured commits suicide, whether sane or insane,
within two years of the issue date, the amount payable will be limited to the
return of premiums paid, less any indebtedness or partial withdrawals. In
the event of suicide within two years of the effective date of any increase
in face amount, the death benefit for that increase will be limited to the
amount of the monthly deductions for the increase.
C. Incontestability Clause
The Policy is incontestable after it has been in force for two
years from the issue date during the lifetime of the insured. An increase in
the face amount or addition of a rider after the issue date is incontestable
after such increase or addition has been in force for two years from its
effective date during the lifetime of the insured. Any reinstatement of a
Policy is incontestable, except for nonpayment of premiums, only after it has
been in force during the lifetime of the insured for two years after the
effective date of the reinstatement.
D. Misstatement of Age or Sex
If the age or sex (except under a Pension Policy or any Policies
sold in Montana) of the insured has been misstated in the application, the
amount of the death benefit will be that
<PAGE> 12
which the most recent cost of insurance charge would have purchased for the
correct age and sex.
V. METHOD OF COMPUTING EXCHANGE ADJUSTMENTS PURSUANT TO
PARAGRAPH (b)(13)(v)(B) OF RULE Ee-3(T) UNDER THE INVESTMENT
COMPANY ACT OF 1940
During the first 24 Policy months following the issuance of the
Policy, or the first 24 Policy months following the effective date of a
requested increase in face amount, the Owner may in effect convert any Policy
still in force to a guaranteed benefit life insurance policy by transferring
the Policy's cash value in the Separate Account to the General Account. If
an Owner elects to convert within 24 Policy months following an increase in
face amount, the Owner can elect to transfer any portion of the Policy to the
General Account for this purpose. Transfers made pursuant to this conversion
right will not affect the death benefit, face amount, net amount at risk,
rate class or issue age under a Policy. No charge will be imposed on any
transfers resulting from the exercise of this conversion privilege, and such
transfers will not count against the limitation on the amount and frequency
of transfer requests allowed in each Policy year.
The cash value of the new Policy on the exchange date will equal
the cash value of the Policy on the valuation date immediately prior to the
exchange date, plus the cash value provided by any net premium credited to
the new Policy on the exchange date less monthly deductions under the new
Policy. The same conditions and principles applicable to the exchange of an
entire policy are equally applicable to an exchange relating to an increase.
No further adjustments are made in cash values and payments upon
an exchange.
<PAGE> 1
Exhibit #5
Matthew P. McCauley
Vice President
Associate General Counsel
Phone: (314) 444-0647
FAX: (314) 444-0510
22 May 1998
General American Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
Dear Sirs:
This opinion is furnished in connection with the offering of individual,
flexible premium variable life insurance policies ("Policies") of General
American Life Insurance Company ("General American") under a Registration
Statement on Form S-6 being filed by General American and General American
Life Insurance Company Separate Account Eleven ("Account") as required by the
Securities Act of 1933, as amended ("Act"). I have supervised the
establishment of the Account on January 24, 1985, by the Board of Directors
of General American as a separate account for assets designed to support the
Policies, pursuant to the provisions of Section 309 of Chapter 376, of the
Revised Statutes of Missouri.
I have made such examination of the law and examined such corporate records
and such other documents as in my judgment are necessary and appropriate to
enable me to render the following opinion that:
1. General American has been duly organized under the laws of the
State of Missouri and is a validly existing corporation.
2. The Account is duly created and validly existing as a separate
account pursuant to the above-cited provisions of Missouri law.
3. The portion of the assets to be held in the Account equal to the
reserves and other liabilities under the Policies is not
chargeable with
<PAGE> 2
liabilities arising out of any other business General American may
conduct.
4. The Policies have been duly authorized by General American and,
when issued as contemplated by the Registration Statement, as
amended, will constitute legal, validly issued, and binding
obligations of General American in accordance with their
terms.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
Very truly yours,
Matthew P. McCauley
Vice President,
Associate General Counsel
MPMcC:te\052198
<PAGE> 1
Exhibit #6
The Board of Directors
General American Life Insurance Company:
Re: "Joint and Survivor Variable
Universal Life 98"
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the Registration Statement and
Prospectus for General American Separate Account Eleven. Our report on
the consolidated financial statements of General American Life Insurance
Company and subsidiaries refers to the adoption of Statement of Financial
Accounting Standards No. 120, Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts in 1996.
KPMG Peat Marwick LLP
St. Louis, Missouri
May 22, 1998
